One of the quieter Internet successes of the last few years has been Disney's (NYSE:DIS) ESPN, which has gotten ISPs like Comcast (NASDAQ:CMCSA) to tack on an extra charge on Internet bills for "ESPN3" or "WatchESPN."
As Slashgear notes Comcast Internet subscribers pay $5.13/month for the ESPN online services, whether or not they use them. (Most don't even know this.) In this way the cable model of forced-subscription has gotten its nose under the Internet tent.
Now Dish Network (NASDAQ:DISH) wants to push through that opening, and is talking to companies like Viacom (NASDAQ:VIA), privately-held Univision and Scripps Networks (NASDAQ:SNI) about "broadcasting" some of their cable channels over the Internet, through Dish.
Presumably Dish would handle the back-end, would convince ISPs to offer the service, and the cable channels would get free money from captive ISP subscribers who, if they don't buy cable services, are "freeloading" by watching Viacom shows like "The Daily Show" on their computers rather than buying the whole channel.
The Dish channels, unlike the ESPN channels, would be opt-in - ESPN doesn't even have an opt-out. In theory the Dish Internet "channels" would also give the programmers leverage over cable companies when they negotiate carriage, because when those talks break down now customers lose access to channels entirely.
Investors may be digesting this and wondering whether to buy DISH, VIA or SNI, but there's another way to play.
Consider News Corp. (NASDAQ:NWS).
Right now there is no assurance this plan will work. Opting-in for Internet carriage of cable networks? It's crazy.
But consider that the ESPN plan has already worked. Consider that NWS has been brilliant at copying working business models. Also consider that NWS is a huge owner of sports programming rights, not just American football but the European kind as well.
You don't think Fox could copy ESPN, say at a slightly reduced price? Tack that onto your ISP bill, pocket a lot of cash for free, and compete even more-avidly against ESPN for sports rights? That business is good enough to be bringing in a host of new players, from Al Jazeera (which owns BEIn Sports) to British Telecom (which just beat out ESPN on a British Premier League contract).
This is where the sports move is moving, there's a real business model underlying it, and once NWS jettisons its money-losing print units it's a pure programming play.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.