Ten Reasons for Why ESPN Business Model will not work in China
The lack of money, talent, deals, and time were brick walls the express train could slam into at any moment.
* Revenue Stream
Actually, Sports TV broadcasters are no more than a business company, it could run smoothly only if the company earns more than it cost, which is a basic balance for a sports network that it have to overcome. Traditional broadcasters like CBS, Fox, and NBC have to balance out the cost of their programming with the advertising revenue they can garner from their programming. This has been the traditional business model for sports rights. And it is simple enough to comprehend, if you pay x for the event, then you have to be able to sell more than x in advertising dollars to justify your bid. But ESPN does not just rely on advertising. Why not? Because cable fee is a major revenue stream for ESPN and it is really easy to earn. Every single person with cable is paying for the right to watch ESPN. Even though you are not watching it, you are making a contribution to, a sports media empire that is getting stronger and stronger, ESPN. This is not a particular surprise, but when you see the money it produces, the figure is absolutely astronomical.
Even though ESPN cannot ignore the deep recession’s impact on advertising, which probably would never happen on ESPN. Its subscriber revenue gives it an extraordinary soft cushion for a absolute ‘safe landing’.
ESPN earns one out of every four dollars earned by cable stations in America. According to SNL Kagan, ESPN charges its cable affiliates an average $5.13 per month for each of its 100 million subscribers (the industry average is about 20¢ per subscriber) while also taking in $2 billion a year in advertising revenue.
However, this is a fantasy in China.
Nowadays, the Chinese sports networks can be divided into four groups: the leading group is China Central Television, which is a state-owned enterprise; Local cable TV stations occupy the second group, which is mainly forced by Beijing, Shanghai and Guangdong; Third group, CSPN, stands for China Sports Programs Network, consists of Hubei, Shandong, Jiangxi, Inner Mongolia, Liaoning and Xinjiang television stations; As well as pay-tv sports channels occupy the fourth group.
The leading group, China Central Television has a variety of privileges such as policy, talent, coverage, program storage, intangible assets and other multi-edge, in control of most of the domestic and foreign large-scale sports competitions resources and important sports events of right. However, there are many live events and nowhere to broadcast, because airtime is too limited to cover all the events. As a result, a waste of resources comes to happen. The second group of local stations in Beijing, Shanghai and Guangdong take advantage of their geographical position and economic actual strength powerful background, which are much more competitive in this race. Nevertheless, other local TV stations, fight for themselves separately, the production team and the level of sports resources are unevenly distributed, quality of program cannot be guaranteed; Third group, CSPN’s construction in the early period is rapid and aggressive, but durable power is insufficient, the actual operation is depressed after a good start; Fourth group, on one hand, the domestic audience are not accustomed to pay-per-view habits, on the other hand, as a result of the cultural and economic restrict, pay-tv makes a poor operating and market income in China.
Obviously, cable fee cannot be the major revenue stream of sports networks in China. Also, most sports networks are responsible for their profit and loss. Without a solid financial support, they are weak to bid for rights of significant games and matches. Also, cable fee is very cheap in China, which is only twenty percent of how much people have to pay in United States. Meanwhile, the major revenue of sports networks is...
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