More Misleading Cord Cutting Articles

***Please see the update posted below on 7/7/2017 which has more thoughts on the survey and an accurate statistic/dollar figure that can be derived from it.***

Another day, another misleading and inaccurate article from a cord cutting website.  Today’s example is from Streaming Observer which claims “ESPN Gets $4.5 Billion a Year from Subscribers Who Say They Don’t Even Want It” in an article published on 6/28/17.  However, that conclusion is not supported by any of the evidence it cites and frankly, is worthless for a variety of reasons.  Below are the various ways, the articles twists statements and stats to end up at that (false) conclusion.

*”Pay TV subscribers who don’t want ESPN are still paying over $4.5 billion annually to have the channel in their packages.”

This statement is false, or at the very least, not proven by any of the statistics or evidence cited in the post.  In other words, it may be true, but it is not proven by any of the evidence the article uses as shown below.

*“A recent survey found that 53% of people don’t care whether or not their TV package includes live sports channels,…”

That is not what the survey (link here) asked. It specifically asked “How important are live sports to you when choosing a TV service?”.  That is NOT the same question as “Do you want or need or prefer to have live sports channels when choosing a TV service?” or “Do you care if your TV service has live sports channels when you made the decision about which one to select/purchase?”  The question that was asked is basically a question of how much importance live sports plays in relation to choosing your TV service, whereas the conclusion reached in the article (and also in the summary of the survey by Cut Cable Today) is that people do not care about receiving sports channels.  Those are two different things.  Live sports not being important to choosing your tv service is NOT the same as not caring or not wanting live sports channels. 

*”… like ESPN and ESPN2 which are included in nearly every basic pay TV package.”
The article specifically references ESPN & ESPN2 but the survey question on which it based its conclusion off of only references “live sports” not the specific ESPN & ESPN2 channels. It made the conclusion regarding 2 specific channels when then is no question that specifically asks about the interest level in them other than a later question in the survey "How often do you watch ESPN?" which is not the same as interest level or importance.  In other words, conflating ESPN & ESPN2 with a generic description of “live sports channels” is misleading.

*”Given that 53% of pay TV subscribers don’t care if they have ESPN or other live sports channels, that means 46,294,970 of ESPN/ESPN2’s subscribers don’t really want the channels.”
I already pointed out that the 53% figure is how many people listed live sports channels as “not important” when choosing their TV service, i.e. it is NOT the # of subscribers that don’t care if they have live sports channels and it most definitely NOT the # of subscribers that “don’t really want” live sports channels.  However, there is another problem with the 53% figure.

The 53% figure includes everyone (n=753) that completed the survey.  But not everyone who completed the survey had a subscription to a cable/satellite/telco service or an OTT cable-lite streaming service (i.e. Vue, SlingTV, DIRECTV NOW, etc.).  This is confirmed in a later question (“How often do you watch ESPN?”) where it states “Of the 753 people we surveyed, 414 were currently subscribed to cable TV.”  Now, one problem immediately is does the phrase “cable TV” only include legacy cable/satellite/telco subscriptions or does it also include OTT cable-lite services such as Vue, Sling TV, etc. which also carry ESPN?  I would assume it’s the latter, but it’s never clarified since Cut Cable Today never released the actual results of the survey, only a written summary to each question and a pie chart. 

What this means is that using the 53% figure, which comes from ALL respondents, and applying that to the group of ESPN/ESPN2 subscribers (which in this survey, comprised only 55% of total respondents) is wildly inaccurate and just flat out wrong.  For example, if someone who subscribes to Netflix & Hulu (not Hulu Live but traditional Hulu) completed the survey and selected “Very Unimportant” to the Live Sports question, that person would represent some part of the 53% who “don’t care/don’t really want” ESPN/ESPN2.  However, that person is NOT an ESPN/ESPN2 subscriber.  So that person is NOT one of the 46,294,970 of ESPN/ESPN2’s subscribers which the article claims “don’t really want the channels” who are paying $4.5 billion per year “despite not wanting those channels”.   So, you can’t take the 53% figure and multiply that by the number of ESPN/ESPN2 subscribers to figure to calculate how many of them don’t want/don’t care about those channels because the 53% figure is of ALL respondents (of which 45% do not subscribe to ESPN/ESPN2), NOT solely ESPN/ESPN2 subscribers.  TO accurate determine the percentage of subscribers that do not care about/do not want ESPN/ESPN2, you would have to take the 414 responses to the Live Sports questions from those who indicated they currently subscribe to ESPN/ESPN2.  Therefore, the percentage of ESPN/ESPN2 subscribers who are paying $8.11/month but do not care about/do not want those channels is not 53%, for a variety of reasons, as this article claims and as such the figure of $4.5 billion is wildly inaccurate.

*”….that’s $375,452,207 people are shelling out every single month despite not wanting those channels. That’s $4.5 billion a year!”

Lastly, I mention this sentence not to explain how those figures are incorrect, but instead to point out the inaccurate wording used in it.  “…people are shelling out every single month despite not wanting those channels…”(emphasis added).  Notice the phrase “not wanting” which is not directly asked (or even inferred) anywhere in the survey.  That phrase is (wrongly) concluded from the wording of a completely different question and another reason why the main conclusion of the article is false.

Let’s review again the steps this article goes through to reach its conclusion.

1-Take a somewhat vague question and twist the original subject of it (importance of live sports) to something else (don’t really care and/or don’t want)

2-Conflate “live sports channels” to mean 2 specific live sports channels which are not mentioned in the question

3-Take a statistic from a survey that came from all respondents and then apply that statistic to a specific subgroup of the respondents (only those who subscribe to ESPN/ESPN2).

4-Scale the statistic to an abnormally large value by multiplying it by various factors (subscription rate per month, number of months in a year).

(Added 7/7/2017):  There are two other important points that I thought of after this article was posted. The first relates to an actual statistic that can be derived from the survey while the second is another reason while the $4.5 billion figure (or even the figure I will demonstrate) is misleading.

I’ve already explained why the conclusion that “ESPN Gets $4.5 Billion a Year from Subscribers Who Say They Don’t Even Want It” is inaccurate and wrong.  However, there is a conclusion that can be drawn from the survey regarding ESPN and the theoretical amount of money it receives from a certain group of its subscribers.  As mentioned previously, there is a question which asks only those who subscribe to cable TV how frequently they watch ESPN.  30% of respondents indicated they never watch it.  Thus, subscribers who receive ESPN (and presumably ESPN2 as well) are paying $8.11/month or $97.32/year for two channels they never watch.  Since there are approximately 87,349,000 households subscribed to ESPN/2, as of March 2017, this means approximately 26,204,700 households never watch ESPN.  More importantly, these households are supposedly (more on why I use this word in the next paragraph) paying ~$2.55 billion/year for ESPN/2.  Thus, a more accurate (and still mind-blowing) result of the survey/headline would be “Disney Gets $2.55 Billion a Year from Subscribers Who Admit They Never Watch ESPN.”

Now, the reason I used the word supposedly in front of the dollar figure I just calculated is that the affiliate fees that ESPN/ESPN2 receives are derived from the regular price of the programming packages from various providers.  In other words, I don’t believe it takes into account the various promotional prices that individuals are on in which they pay the providers much less than the regular advertised rate; therefore, they are not paying the full affiliate fee.  For example, I am currently on a one-year contract with DirecTV where my base programming rate for Choice is $29.99/month.  If you take away the local channel costs, usually estimated at $5-$10/month depending on the market, that leaves $20-$25/month left to pay for the remaining 170 channels in my Choice package.  However, the estimated fees of all these remaining channels far exceeds that $20-$25 figure.  If you look at just the 11 national sports channels alone, not including any RSNs since there is a separate RSN fee, they total ~$17, leaving between $3-$8 for about 150 more channels.  And this doesn’t even factor in any other costs DirecTV has that are associated with providing & operating their service (labor, website maintenance, support, etc.).  In other words, ESPN, or rather Disney, isn’t getting $8.11/month from me.  Some portion of that money is coming out of DirecTV’s pocket.  Now it may be that the $8.11 figure for ESPN & ESPN2 is an average fee across all subscribers, including both those who are paying regular price and those who aren’t.  However, if that is the case, it would mean two things.  First, it would mean that the overall contribution, $2.55 billion/year, is still accurate because the overall “average” fee is still accurate.  Second, it would also mean that those on promotional rates are actually paying less than $8.11/month and those who aren’t (i.e. those paying the regular advertised rate) are paying more than $8.11/month.  So even if this is the case, it’s still true that there are some number of people, like myself, out there who are NOT paying $97.32/year for a channel they never watch.