Why your cable bill might keep going up

LOS ANGELES - Americans this past year collectively spent 31 billion hours watching sports on TV - a 40 percent increase from a decade ago.

They watched football, baseball, basketball, hockey, horse racing, NASCAR, rowing, rugby, soccer and volleyball - even Little League championships and poker games.

'Live sports is the most valuable content on the planet,” said Adam Ware, head of digital media at Tennis Channel.

Pay-TV distributors such as DirecTV and Charter Communications have written increasingly bigger checks for the rights to carry sports channels - fortifying a business model in which cable and satellite TV subscribers, and advertisers, underwrite the costs.

Sports have become the glue holding the pay-TV bundle together. While internet streaming options including Netflix, Hulu and Amazon.com offer thousands of hours of scripted shows, there is little in the way of live sports. So sports fans remain tethered to their cable bundle.

But heading into 2017, it could be a new ballgame. The cable business model that sports channels helped build is under siege. Pay-TV companies are balking at paying higher rights fees, fueling the kind of standoff that, for example, has kept thousands of fans from watching the Los Angeles Dodgers's channel.

Pay-TV penetration peaked in 2009, and declines in the number of households that subscribe to a satellite or cable TV service have accelerated. Since 2010, basic cable channels such as ESPN, TNT and Discovery have lost more than eight million subscribers.

Consumers are weary of never-ending increases in their monthly pay-TV bills, which have been partly fueled by rising sports costs. And unlike years ago, they have cheaper online alternatives.

'Every year, there are more entertainment options for people to fill their leisure time,” said Dennis Deninger, a former ESPN production executive who now teaches sports communications at Syracuse University.

Sports programming generates $30 billion a year in revenue for TV companies, according to Barclay's Capital. Big games grab the highest ratings. Last month, Fox Broadcasting scored 40 million viewers for the final World Series game. And fans tend to watch sports programs live, rather than fast-forwarding through the ads, which allows networks to charge a premium for the commercial time.

Sports now make up about 40 percent of programming costs paid by cable and satellite TV operators. For example, ESPN costs an average $7.20 a month, per subscriber home, and a channel such as SportsNet LA has been offered for about $4.50 a month, per subscriber home, according to consulting firm SNL Kagan. The NFL Network costs pay-TV companies $1.39 a month per subscriber - nearly twice the fee of such popular channels as Nickelodeon or CNN.

SNL Kagan estimates that pay-TV customers next year will chip in an average $18.37 a month for sports, up from $2.85 a month in 2001.