• Home
  • Politics
  • Health
  • World
  • Business
  • Finance
  • Tech
  • More
    • Sports
    • Entertainment
    • Lifestyle
What's Hot

Trump Announces First Post-Tariff Trade Deal

May 8, 2025

100 Funny Father’s Day Quotes for Hilariously Relatable Humor (and Plenty of Love Too)

May 8, 2025

Top 10 Benefits Of Acupuncture

May 8, 2025
Facebook Twitter Instagram
  • Contact
  • Privacy Policy
  • Terms & Conditions
Friday, May 9
Patriot Now NewsPatriot Now News
  • Home
  • Politics

    Security video shows brazen sexual assault of California woman by homeless man

    October 24, 2023

    Woman makes disturbing discovery after her boyfriend chases away home intruder who stabbed him

    October 24, 2023

    Poll finds Americans overwhelmingly support Israel’s war on Hamas, but younger Americans defend Hamas

    October 24, 2023

    Off-duty pilot charged with 83 counts of attempted murder after allegedly trying to shut off engines midflight on Alaska Airlines

    October 23, 2023

    Leaked audio of Shelia Jackson Lee abusively cursing staffer

    October 22, 2023
  • Health

    Disparities In Cataract Care Are A Sorry Sight

    October 16, 2023

    Vaccine Stocks—Including Pfizer, Moderna, BioNTech And Novavax—Slide Amid Plummeting Demand

    October 16, 2023

    Long-term steroid use should be a last resort

    October 16, 2023

    Rite Aid Files For Bankruptcy With More ‘Underperforming Stores’ To Close

    October 16, 2023

    Who’s Still Dying From Complications Related To Covid-19?

    October 16, 2023
  • World

    New York Democrat Dan Goldman Accuses ‘Conservatives in the South’ of Holding Rallies with ‘Swastikas’

    October 13, 2023

    IDF Ret. Major General Describes Rushing to Save Son, Granddaughter During Hamas Invasion

    October 13, 2023

    Black Lives Matter Group Deletes Tweet Showing Support for Hamas 

    October 13, 2023

    AOC Denounces NYC Rally Cheering Hamas Terrorism: ‘Unacceptable’

    October 13, 2023

    L.A. Prosecutors Call Out Soros-Backed Gascón for Silence on Israel

    October 13, 2023
  • Business

    Trump Announces First Post-Tariff Trade Deal

    May 8, 2025

    Electric Vehicle Sales Nosedive As GOP Takes Buzzsaw To Biden’s Mandate

    May 7, 2025

    Tyson Foods Announces It Will Bend The Knee To Trump Admin’s New Rules

    May 7, 2025

    Federal Reserve Holds Interest Rates Steady Despite Pressure From Trump

    May 7, 2025

    ‘Wait Them Out’: John Kennedy Tells Larry Kudlow One Lie He Suspects China’s Telling US

    May 7, 2025
  • Finance

    Ending China’s De Minimis Exception Brings 3 Benefits for Americans

    April 17, 2025

    The Trump Tariff Shock Should Push Indonesia to Reform Its Economy

    April 17, 2025

    Tariff Talks an Opportunity to Reinvigorate the Japan-US Alliance

    April 17, 2025

    How China’s Companies Are Responding to the US Trade War

    April 16, 2025

    The US Flip-flop Over H20 Chip Restrictions 

    April 16, 2025
  • Tech

    Cruz Confronts Zuckerberg on Pointless Warning for Child Porn Searches

    February 2, 2024

    FTX Abandons Plans to Relaunch Crypto Exchange, Commits to Full Repayment of Customers and Creditors

    February 2, 2024

    Elon Musk Proposes Tesla Reincorporates in Texas After Delaware Judge Voids Pay Package

    February 2, 2024

    Tesla’s Elon Musk Tops Disney’s Bob Iger as Most Overrated Chief Executive

    February 2, 2024

    Mark Zuckerberg’s Wealth Grew $84 Billion in 2023 as Pedophiles Target Children on Facebook, Instagram

    February 2, 2024
  • More
    • Sports
    • Entertainment
    • Lifestyle
Patriot Now NewsPatriot Now News
Home»Sports»How ESPN Went From Disney’s Financial Engine to Its Problem
Sports

How ESPN Went From Disney’s Financial Engine to Its Problem

August 2, 2023No Comments7 Mins Read
Facebook Twitter Pinterest LinkedIn Tumblr Email
How ESPN Went From Disney’s Financial Engine to Its Problem
Share
Facebook Twitter LinkedIn Pinterest Email

ESPN has been Disney’s financial engine for nearly 30 years, powering the company through recessions, box office wipeouts and the pandemic. It was ESPN money that helped Disney pay for acquisitions — Marvel, Lucasfilm, Pixar, 21st Century Fox — and build a streaming service, transforming itself into a colossus and perhaps traditional media’s best hope of surviving Silicon Valley’s incursion into entertainment.

Those days, ESPN’s best, are over.

With its dual revenue stream — fees from cable subscribers and advertising — the sports juggernaut continues to earn billions of dollars for Disney. In the first six months of the 2023 fiscal year, Disney’s cable networks division, which is anchored by ESPN and its spinoff channels, generated $14 billion in revenue and $3 billion in profit.

The problem: Wall Street is fixated on growth. Revenue for those six months was down 6 percent from a year earlier, as profit plunged 29 percent.

Disney is now exploring a once-unthinkable sale of a stake in ESPN. Not all of it, Robert A. Iger, Disney’s chief executive, has made clear. But he wants “strategic partners that could either help us with distribution or content,” he said during an interview with CNBC last month. Disney has held talks with the National Football League, the National Basketball Association and Major League Baseball about taking a minority stake.

Underscoring the complexity — and urgency — Mr. Iger has brought in two former senior Disney executives, Kevin Mayer and Thomas O. Staggs, to consult on ESPN strategy with James Pitaro, the channel’s president, and help put together any deal. Their return, earlier reported by a Puck newsletter, was confirmed by two Disney executives who spoke on the condition of anonymity to discuss internal matters.

“It is really tricky in this cord-cutting environment to see the real growth opportunities available to ESPN,” Steve Bornstein, a former chief executive of ESPN, said in an interview. Still, “they have a great hand,” he added, reeling off strengths like the numerous rights the network has to air live games, its digital assets and a popular website.

See also  Security Cam Shows UFC Champ Sean Strickland Holding Trespasser at Gunpoint in Front of His Home

Mr. Iger made clear during the interview with CNBC that things will change at ESPN, but his comments generated more questions than they answered. Exactly what kind of strategic partner is ESPN seeking? Does ESPN need money, technological help or assistance with distribution?

“There is so much uncertainty in what Bob meant,” said Michael Nathanson, a media analyst at MoffettNathanson.

Mr. Iger declined to comment. Disney is scheduled to report quarterly earnings next week. Analysts expect per-share profit to have declined 11 percent, as the company contends with disappointing box office results, softening attendance at Walt Disney World and two striking Hollywood unions.

Whatever might be in ESPN’s future, its problems are easy enough to understand.

The bulk of ESPN’s revenue comes from what are called affiliate fees. These are monthly fees that cable providers — like Comcast, Charter Communications and Cox — pay ESPN for the right to offer its television channels to households. Last year around 71 million United States households paid for a television package that included ESPN, and those cable providers, in turn, paid ESPN an average of $8.81 per month for each home, according to S&P Global Market Intelligence.

S&P Global Market Intelligence estimates that ESPN has also taken in more than $2 billion annually in advertising in recent years.

But cord cutting has been hurting both those revenue streams. A decade ago, more than 100 million households received ESPN, meaning 30 million fewer households get ESPN today than in 2013. ESPN has consistently raised its affiliate fee to offset this decline, but its ability to continue doing so will be limited in the coming years: By 2027, fewer than 50 million homes will pay for cable television, according to PwC, the accounting giant.

See also  Toyota suspends sales of Yaris model in Thailand after safety test problem

At the same time, ESPN’s costs are exploding. ESPN will pay an average of $2.7 billion annually over the next decade for the right to show the N.F.L., a 42 percent increase from what it used to pay. It will soon negotiate with the N.B.A. on a potentially very expensive renewal of its rights agreement.

According to Disney’s financial filings, it will pay $10.8 billion this year for sports programming. It has future commitments totaling about $57 billion, with some of its contracts running well into the 2030s. These contracts are a result of a spending spree the company has undertaken to head off deeper-pocketed tech companies, which are also hungry for sports programming, and to stock its nascent ESPN+ streaming service.

“The cord-cutting phenomenon is a response to the increasing cost of cable, and indeed the increasing cost of cable is due in part to the increasing cost of sports rights,” said Roger Werner, a former ESPN chief executive who helped create the dual revenue stream. “There is a causality there.”

To pay for the rights, ESPN has cut back in other areas — primarily original programming — and relied more heavily on a handful of its most famous personalities, like Stephen A. Smith. Once justifiably proud of never having undergone layoffs, the company has seen six waves of layoffs since 2015, including one that affected a number of high-profile executives and on-air personalities in June.

At the same time, it is confronting the turbulent economics of the streaming era.

ESPN+ shows thousands of games annually, but very few are the biggest N.F.L., college football, N.B.A. or baseball games. Those marquee matchups are reserved mostly for ESPN and ABC, which is also owned by Disney (and potentially for sale). Sports leagues are reluctant to allow media companies to offer games exclusively on streaming platforms, where they almost always reach much smaller audiences than on network or cable television.

See also  The N.F.L.’s Betting Penalties Put Ideal of ‘Integrity’ to the Test

As of April, ESPN+ had 25.3 million subscribers, though only five million people paid for it directly, according to Disney’s financials. The bulk of ESPN+ subscribers bought it as part of a discounted bundle with the far more popular Disney+ and Hulu streaming services.

Mr. Nathanson, the analyst, called ESPN+ a “complementary” product, something attractive mostly to die-hard sports fans.

The question, then, is when will Disney offer ESPN as a stand-alone streaming channel, allowing people to buy it à la carte, and not as part of some larger package of channels they don’t really want?

“We haven’t said when, but we do know that it will happen,” Mr. Iger said on CNBC.

Pricing, however, is an enormous obstacle. Offering ESPN à la carte will assuredly hasten the erosion of the cable bundle, which is held together mostly by sports.

“The current cable bundle, if you are a sports fan, is probably the optimal way to watch sports content because the majority of sports are in that bundle,” Mr. Nathanson said.

Affiliate fee increases for other Disney channels will slow, or even decrease, when they are sold on their own without ESPN. Cable providers are likely to be far more aggressive in offering cheaper, skinny bundles that do not include ESPN channels.

Disney’s family of sports channels currently earn somewhere north of $12 per month in affiliate fees for each cable subscription, according to S&P Global Market Intelligence. Estimates vary widely, but if ESPN offered its cable channels à la carte, it would most likely have to charge an astonishingly high fee for the streaming service, perhaps $40 or $50 per month, just to maintain its current revenue.

“It is not easy,” Mr. Nathanson said. “It really is not. That is why they have been reluctant to do it.”

Disneys Engine ESPN Financial Problem
Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

Related Posts

Trump Admin Ready To Provide Another Round Of Financial Aid To Farmers Impacted By China Trade War

April 28, 2025

Indonesia’s Rupiah Falls to Lowest Level Since Asian Financial Crisis

March 26, 2025

The Financial Scandal at Indonesian Tech Unicorn eFishery, Explained

February 14, 2025

Biden Handing Trump A Financial ‘Ticking Time Bomb’ As Gov’t Budget Deficit, Spending Soars

January 15, 2025
Add A Comment

Leave A Reply Cancel Reply

Top Posts

Erdogan’s Alliance Brings Terror-Linked Islamist Party into Parliament

May 23, 2023

Ukraine Vows to Protect Chinese Assets After Russians Bomb Consulate

July 24, 2023

Fresh Unrest In France As Anger Simmers Over Police Shooting

June 29, 2023

Zelensky Fires Regional Military Recruitment Heads over Bribery Claims

August 15, 2023
Don't Miss

Trump Announces First Post-Tariff Trade Deal

Business May 8, 2025

President Donald Trump announced Thursday the U.S. has reached a trade agreement with the U.K.,…

100 Funny Father’s Day Quotes for Hilariously Relatable Humor (and Plenty of Love Too)

May 8, 2025

Top 10 Benefits Of Acupuncture

May 8, 2025

Electric Vehicle Sales Nosedive As GOP Takes Buzzsaw To Biden’s Mandate

May 7, 2025
About
About

This is your World, Tech, Health, Entertainment and Sports website. We provide the latest breaking news straight from the News industry.

We're social. Connect with us:

Facebook Twitter Instagram Pinterest
Categories
  • Business (4,110)
  • Entertainment (4,220)
  • Finance (3,202)
  • Health (1,938)
  • Lifestyle (1,626)
  • Politics (3,084)
  • Sports (4,036)
  • Tech (2,006)
  • Uncategorized (4)
  • World (3,944)
Our Picks

Aussie corporate regulator alleges IAG units misled home insurance customers

August 25, 2023

Nearly A Third Of Families Expect Back-To-School Shopping To Push Them Into Debt

August 20, 2024

TV schedule, start time, order of play, live streaming details and more

July 13, 2023
Popular Posts

Trump Announces First Post-Tariff Trade Deal

May 8, 2025

100 Funny Father’s Day Quotes for Hilariously Relatable Humor (and Plenty of Love Too)

May 8, 2025

Top 10 Benefits Of Acupuncture

May 8, 2025
© 2025 Patriotnownews.com - All rights reserved.
  • Contact
  • Privacy Policy
  • Terms & Conditions

Type above and press Enter to search. Press Esc to cancel.