What Does Disney Want To Do With ESPN?
Issue #129 — Disney's Bob Iger has brought back two former lieutenants to help him figure out how best to position ESPN.
What Does Disney Want To Do With ESPN?
Two executives have returned to the Disney fold…sort of. Kevin Mayer and Tom Staggs, who previously held senior roles at the media conglomerate, are back in consultancy roles, helping Disney CEO Bob Iger and ESPN President Jimmy Pitaro figure out what pathway needs to be taken when it comes to the future of the worldwide leader in sports.
Iger, back in July, said that he is looking for a strategic partner for ESPN to help offset the ever-increasing costs that have arisen due to its venture into the streaming world and the escalating price of acquiring sports media rights.
ESPN is an expensive channel, and its assortment of live sports programming meant it could charge pay-TV distributors high carriage fees of around $7 per average subscriber. Pay-TV naturally passes on the cost to its subscribers, leading to a pay-TV bill that, for many, became unaffordable, creating the current cord-cutting era.
Between January and August of this year, 3.1 million customers have let go of their pay-TV subscriptions. The effects of the cord-cutting are prominently showing up on ESPN’s balance sheet as it feels the loss of that revenue. Making matters more urgent for the sports network is that it lost its ranking as the sports channel available in most American homes, falling behind to FS1. FS1 stands at 71.375 million, while ESPN is at 71.321 million.
So what is ESPN going to do? Enter Mayer and Staggs, who have been brought on not to stem the flow, but to help ESPN transition from its pay-TV dependency. One route that they are embracing is streaming.
ESPN already has a streaming service in ESPN Plus. However, it does not carry much of the network’s marquee programming as ESPN’s carriage deals with pay-TV distributors prohibit such actions, but the rapid pace of cord-cutting will eventually force ESPN’s hand.
ESPN has been putting it out in the universe for some time now that it will eventually move its programming to a direct-to-consumer platform and is eyeing that switch within the next few years. That move, though, could be accelerated if its pay-TV subscription numbers dip below the 50 million threshold.
ESPN Plus, for now, will continue to be the placeholder for ESPN and will allow the network additional time to fine-tune its streaming operations as competition heats up in the streaming sports arena with Amazon and AppleTV Plus now carrying live sports and Netflix's entrance into the live sports looming in the horizon.
The other issue that ESPN needs to work on is finding a strategic partner to help deal with the ever-rising sports media rights costs. The House of Mickey has already had initial talks with the NFL, MLB, NBA, and NHL about becoming minority partners, but there has been no word on whether any of these leagues would join.
Mayer and Staggs come with extensive knowledge regarding the streaming world and its complexities as they helped build the foundation and executed the launch of Disney Plus.
Having these familiar faces helping Iger with his transformation of Disney provides him with a sense of familiarity and comfort. However, it is interesting that these were the same people he passed on during his last tenure when he named Bob Chapek as Disney’s next leader.
Will they be in consideration again when Iger is ready to name his successor?
How they reposition ESPN and the success of that will undoubtedly be a determining factor.
(CNBC, Variety, The Streamable, The Wall Street Journal)
RECAP - Warner Bros. Discovery Edition
Max loses 1.8 million subscribers in the 2nd Quarter
It was a mixed bag of results for Max, the rechristened streaming service from Warner Bros. Discovery. As part of WBD’s second-quarter results, Max lost 1.8 million subscribers, putting its total subscriber count at 95.8 million. That was the bad news; the good news is that the streaming losses for Max are decreasing, as it saw a $3 million loss in this quarter compared to $558 million in the same period a year ago. The other piece of good news is that Max’s EBITDA for the first half of the year will be in the black, according to WBD CEO David Zaslav. WBD executives are happy with Max’s performance, especially after the rebrand that brought on additional marketing costs and the anticipated user drop due to the subscription overlap of those who had also subscribed to Discovery Plus. WBD, meanwhile, believes the streaming service will achieve a full year of profitability in 2023. (MediaPost)
Sports And News Could Be On A Special Priced Tier On Max
Max's rebrand took place in March of this year, and it was supposed to be the marriage of content from what used to be the WarnerMedia and Discovery sides of the business. But one important category has been missing from the streamer since its rebirth — live news and sports. During its second-quarter call WBD head David Zaslav indicated that the company has special plans for this vital piece of the content pie, saying, “News and sports are important differentiators. They’re compelling, and they make these platforms come alive.” There is talk that news and sports could be added to Max on a separate tier from the rest of its content offerings and made available for an additional fee. WBD is confident that its robust premium content of live news from CNN and sports, including the NBA, MLB, NHL, and AEW, should be enticing enough to squeeze more dollars from its subscriber base. (TVNewser)
WBD To Exit The RSN Business
During its second-quarter results, the once-lucrative regional sports business (RSN) took another hit as WBD indicated that it is in the process of negotiating with various teams and leagues on how to unload its RSNs. WBD operates three RSNs (AT&T SportsNet Pittsburgh, AT&T SportsNet Houston, and AT&T SportsNet Rocky)and has a 30% stake in Root Sports Northwest. Unlike the drama between Bally Sports and the MLB regarding media rights payments, WBD has been current with its payments to the various teams carried on its RSNs. WBD is hoping to be RSN-free either through closures or sales by the end of the year. Despite the company’s offloading of RSNs, they still believe in their linear business, with WBD head David Zaslav saying, "We like the businesses we have - we feel very good about our hand.” (Awful Announcing, Joe Flint/Twitter)
QUICK RECAP
CNN's graphics operator Melissa Elka unexpectedly passes away. (CNN This Morning/Twitter)
Tim Carter was named executive producer of CNN Newsroom with Jim Acosta. (CNN Press Room)
Nicole Auerbach joins NBC Sports as lead college football insider. (Nicole Auerbach/Twitter)
Jeffery Goldberg named moderator of the renamed Friday PBS show Washington Week with The Atlantic. (The New York Times)
Former NFL player Devin McCourty joins NBC Sports NFL pregame show Football Night in America. (Awful Announcing)
Daniel Strauss joins CNN as a reporter covering national politics. (CNN Press Room)
Donald Trump: Former president’s indictment announcement saw MSNBCovertake Fox News in the ratings. (The Wrap)
Donald Trump: Fox News subpoenaed by Donald Trump for Tucker Carlson tapes. (Puck $$$)
Donald Trump: How the cable news covered Trump’s third indictment. (TVNewser)
Donald Trump: Is there a problem with how TV news covers Donald Trump? (Los Angeles Times)
Women’s World Cup: Overnight matchups are not favoring the USWNT ratings on Fox. (Sports Media Watch)
Tennis Channel makes $8 million in profit in the 2nd Quarter. (Broadcasting+Cable)
Could Netflix acquire the Premier Lacrosse League? (Front Office Sports)
Florida and California governors Ron DeSantis and Gavin Newsom agree to debate on Fox News. (TVNewser)
Layoffs come to E! News. (The Wrap)
Fox News’ Greg Gutfeld has gone silent on TV regarding his Holocaust-related comments. (The Daily Beast)
College football game announcers for the 2023 season were named by NBC Sports. (NBC Sports Group Press Box)
CNBC launches new ad campaign called “Live Ambitiously.” (Talking Biz News)
Could the Pac-12 be heading to AppleTV Plus? (ESPN)
Steve Levy celebrates his 30th year at ESPN. (ESPN Front Row)
ESPN wants to lure Colin Cowherd away from Fox Sports. (Front Office Sports)
NASA to launch NASA Plus streaming service. (The Wrap)
Carrie Underwood to once again helm the opening of NBC Sports’ Sunday Night Football. (NBC Sports Group Press Box)
CBS Sports to air an alternate broadcast of Super Bowl LVIII on Nickelodeon. (Front Office Sports)
Top news executives depart Vice Media after bankruptcy. (Katie Robertson/Twitter)
NewsNation's Leland Vitter to moderate Vivek Ramaswamy town hall. (TVNewser)
NBC News unveils new graphics package for Today. (NewscastStudio)
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A MarkHenry Media LLC publication - Issue #129 - 2023