Sports-Free TV Service Tests Market for Web Bundle Without ESPN
(Bloomberg) -- Tired of paying for sports coverage you don’t watch? Meet Philo.
The sports-free online TV service debuting Tuesday features channels from Viacom Inc., AMC Networks Inc., Discovery Communications Inc. and others. It will test whether there’s a substantial market of consumers who can live without seeing their favorite teams or athletes in action.
For $16 a month, Philo users will be able to watch popular shows like AMC’s “The Walking Dead” and Discovery’s “Shark Week” on more than three dozen cable networks. Subscribers can buy an additional nine channels for $4 a month. What’s missing is the four major broadcast networks, the sports and entertainment programming they carry, and ESPN.
Sports, the most popular live programming on television, also is the most expensive, with ESPN alone adding almost $8 a month to the cost of pay-TV subscriptions, according to SNL Kagan. Philo is aiming for the budget-conscious sports agnostic.
“A lot of consumers are turning away from cable because the price is too high,” said Philo Chief Executive Officer Andrew McCollum. “Sports channels are by far the most expensive.”
All of the media companies with channels on Philo, including A&E Networks Inc. and Scripps Networks Interactive Inc., the home of HGTV, were investors in the startup’s latest $25 million funding round. Previous Philo investors include Time Warner Inc.’s HBO, entrepreneur Mark Cuban and the talent agency WME. Philo has raised $51 million.
Philo is the latest of the new online-TV services that are challenging traditional cable at a cheaper price with slick user interfaces. Most of the fresh offerings, like Dish Network’s Sling TV and AT&T Inc.’s DirecTV Now, include ESPN and regional sports networks, and cost $35 a month or more. While the industry refers to them as “skinny bundles,” Discovery CEO David Zaslav has said they’re more like “overstuffed turkeys” that still carry more channels than people want.
Zaslav’s company and other cable programmers are joining the online services to make up for subscriber losses as people switch to cheaper entertainment options like Netflix Inc. Philo contributors Viacom, home of MTV and Comedy Central, and Discovery, owner of TLC and Animal Planet, aren’t part of new TV services from YouTube or Hulu.
Philo isn’t unique. The two largest cable operators, Comcast Corp. and Charter Communications Inc., also offer TV subscriptions without the popular sports channel ESPN.
For years pay-TV providers toyed with the idea of offering cheaper packages by leaving out pricey sports channels, but were handcuffed by contracts with programmers like Disney and Fox that require their networks be part of the most popular packages. By working with Philo, a new distributor, programmers seem to have found a way around that.
And by licensing only cable channels, Philo avoided a complication that other new online TV providers have encountered: to include broadcast channels like CBS or ABC, you need to cut deals with dozens of their local affiliates.
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