Will ESPN bring down the entire pay-TV industry?

We’ve told you the story before: ESPN gets a huge slice of the average pay-TV bill. It’s estimated that up to 25% of the average customer’s bill goes to Disney, the parent of ABC, ESPN and the Disney Channels. Yet, it seems that it’s not enough.

The word we hear is that DISH and ESPN are about to have a scuffle, and there’s no question that it’s the subscriber who will suffer. MediaPost reports that DISH’s contract with ESPN expires September 30, and that there is no new contract in place.

How much more could ESPN want? It’s already the most expensive “basic” network. Yet, it’s likely that they’re asking more than DISH is willing to pay. DISH has already shown that it will play hard ball, blacking out any station that doesn’t agree to a contract. Now, DISH’s sights seem to be on sports at a time that college football begins, major league baseball ends, and NFL, NHL and NBA action are right around the corner.

DISH’s Charlie Ergen has shown before that he’s not afraid of a fight and he will have one on his hands as he tries to tame ESPN. This could be the fee fight that breaks the whole system. DISH has plenty of money, as a result of having not bought Sprint (don’t worry, that’s the last we’ll say about the whole mess) They can live through some subscriber losses in the third quarter if that’s what it takes. Of course, Disney probably has some massive cash reserves too and they have enough media exposure that they could sway public opinion.

The fact that both players are strong is bad news for customers. It could mean a long and protracted fee fight where both sides get nasty. ESPN could simply open up its watchESPN app to everyone and encourage people to drop DISH, while DISH could hold customers to the letter of their agreements, making it expensive for them to leave. All this time, there would be no ESPN on DISH.

Losing ESPN for a significant part of the fall could have long-term consequences for the entire industry. On the other hand, caving to ESPN’s demands could be just as bad. Imagine a day where you pay $200 for basic service. If all these content providers get their way… it could happen.

You can bet that we’ll be watching this whole thing carefully, hoping for a quick and fair resolution. But is that how this sort of thing ever happens?