Ballmer said the OTT venture can return things to a “capitalist” focus on new opportunities and change. And few will argue that changes loom for the TV sports industry.
OTT has become a crucial buzzword as cable “cord-cutting” among younger generations of viewers threatens the sports TV model now carrying teams and leagues financially. Viewers are increasingly put off by escalating cable TV subscription rates — largely attributable to massive rights fees for sports programming — and have switched to cheaper Internet streaming of their favorite shows.
The dilemma facing sports teams is clear: If viewers keep dropping cable TV, those massive rights fees paid on RSN deals of 10, 15 and even 20 years no longer would be worth it. And that would impact the ability of teams and leagues to keep landing huge TV deals currently sustaining their industry and hefty player salaries.
Ballmer is feeling some of that squeeze.
When he bought the Clippers two years ago for $2 billion, the idea behind justifying the price was that the team’s TV rights would be worth well over $100 million annually. But the best offer from Fox during negotiations was a reported $60 million per season.