If right now they rely on people paying for the channel but not watching it. Wouldn't switching to a streaming model mean that advertisers would be more interested because more people were actually watching the channel and saw ads?
Most people (>50% iirc) don't watch sports, but because of the arrangement described above most cable subscribers end up subsidizing it.
As a result: Selling sports directly to people who watch it dramatically undercuts their business model.
In Major League Baseball's case, they reserve that right for themselves. Of course, every baseball team also has its own local contract or network.
I get the feeling that ESPN is a middleman that is increasingly being seen as not adding enough value for the price by its subscribers.
ESPN probably expected that as well. In the US, you would expect almost any sports channel to have enough fans to make a profit. If people are going to drop channels they don't want, you would expect sports channels to be immune.
Apparently it hasn't turned out that way.
I can say that the last three times I went shopping for cable TV, the sports bundle was extra. Personally, I like hockey, but not much else. I would be happy to pay $7 a month for hockey games, but I wasn't given that option. I needed to pay much more, for a much larger bundle, and I chose to live without it.
Cable/satellite isn't really as big in Australia as it is in the States and Canada, but the last time I looked it was still $30+ a month if you wanted sport in HD (you know, so you can actually see where the ball is)
1: http://www.afl.com.au/news/2016-12-06/foxtel-decides-against...
I suspect Foxtel will be in a similar position to ESPN come the next rights deal, where they can't afford to pay as highly due to people cancelling cable. Hopefully though that just results in a better streaming deal.
That's a lot of streamers to get to commit to 12 months of subscription.