The 2005 Ashes series was the high point for coverage on free-to-air TV. Then the English Cricket Board signed a four year deal with Sky worth £220m. When the deal was signed a total of 8m out of approximately 25m UK households had Sky. For 2006 the estimated "average viewing figure was just 261,000 ... about one-third of the figure that used to watch on Channel 4".
The analysis in Paul Rouse's paper is similar to a case study presented in The Economics of Sports Broadcasting by Chris Gratton and Harry Arne Solberg. The case study examines what happened to the broadcast demand for rugby league in the UK during the 1990s. Table 1 below reproduces the viewing figures from the case study. The figures for the years 1992-1995 refer to the BBC whereas the figures for 1996 to 1999 refer to Sky. There is a clear reduction in viewing figures between 1995 and 1996.
As Lisa O'Keeffe (author of the case study) points out, it is possible that the figures include a drop in the popularity of rugby league. To this end she produces viewership number for the Challange Cup final that was broadcast on the BBC for the full 1992-1999 period. These numbers are reproduced in Table 2. It seems that for the period in question rugby league is declining in popularity - although O'Keeffe raises the possibility that some of that decline could be as a result of the switch to Pay-TV.
The question for the sporting organisations is whether this decline in viewship is compensated by the higher revenues they get from the broadcasters. Given their decisions it would seem that they think it is. Of course there are issues of who gets to see the games. This brings us to the politics of the issue. Something that is discussed in detail in the paper by Paul Rouse. It is worth reading (even if you are Minister Simon Coveney).