• ESPN Continues Dampening Cord-Cutting Fears

    ESPN released the its latest round of research on cord-cutting this week, finding that a tiny .18% of American homes with both pay-TV service and a broadband connection dropped their video service between the fourth quarter of 2010 and the first quarter of 2011. ESPN said the .18% is actually lower than the .28% it found in its prior period research and is fully offset by a comparable number of people who upgraded from a "broadcast-only" service level to a full pay-TV package. Not surprisingly, ESPN said that among medium-to-heavy sports viewers there was zero cord-cutting.

    The research, which coincided with SNL Kagan's news that the U.S. pay-TV industry gained 65,000 subscribers in Q4 (which was light, but at least reversed the 2 prior quarters of losses), will help dampen fears about cord-cutting. Of course there's no cable network group with more at stake in the cord-cutting debate than ESPN and its sister networks, which are the most expensive ones for pay-TV operators to license.

    As I recently wrote, the massive subsidization of expensive sports networks by non-sports fans and casual fans - which could amount to over $3 billion annually - is a huge point of vulnerability for pay-TV operators as consumer behavior shifts to online/on-demand viewing. Pay-TV operators must figure out how to address entertainment-centric consumers who are most prone to drop their pay-TV service, or just not signing up in the first place.