The scenario is as follows: ESPN is the reason people buy cable. Without it cable is dead. Cable companies MUST have ESPN so ESPN has an enormous amount of leverage and use it to extract as much cash as possible. In this case cable providers are just the middlemen; either they say no to ESPN and lose all their subscribers, or raise the rates to untenable levels slowly and eventually lose all their subscribers while making a boat load of cash on the way. They unsurprisingly chose option B.