PPV: Cable/satellite providers take a 50% cut of every buy

So I keep seeing these post like "how can Showtime only break even on 1.2 million buys at $60 a pop...that $72 million!!!! It doesn't make sense.

Here's why:

The cable/satellite provider (i.e. Comcast, Direct TV etc) gets a 50% cut from every PPV buy. They are the gateway into your home. The Showtimes and HBO's of the world need them to deliver the fight into your home.

Let's say the average price paid was $60 (it's my understanding that the HD broadcast was $70 and standard definition cheaper) so the average was maybe $60 per buy just for arguments sake.

$60 X 1.2 million buys = $72 million. 50% of that goes to cable/satellite, that leaves $36 million. Floyd's guarantee is $32 million.

That leaves $4 million. How much did it cost to promote, to film the all access shows etc.

This is why 1.1 - 1.2 million buys is the break even point.

If the Floyd-Guerrero fight did 700,000 buys like some have claimed (I for one think it's probably higher) Showtime is going to take a massive loss here.

Some may say that's a good thing for the sport, I tend to disagree. I don't think it's ever a good thing when the marquee attraction of the sport doesn't do well on tv no matter what you may think of him. Something like this cuts into Showtimes boxing budget big time.

 

I also read somewhere that he was getting a cut of the PPV's as well, but I'm not sure if that's true.

 

Without them there is no PPV. They deliver the signal to people's homes. Think of it as oil. You may not own the oil but you own the pipeline it travels through so you can make these types of demands. Without the pipeline the oil isn't going anywhere.