Anyone over 50 can remember the Disney they all grew up with as being the company that brought us Mickey Mouse, Donald Duck, Minnie, Goofy and Pluto, but over the years, the Disney company has morphed into a huge conglomerate stretching it’s tentacles into all types of entertainment.
The obvious ones, of course, are movies, television and theme parks, but cable sports broadcasting was a major revenue draw up until recently. Now, much of their ESPN subscriber base has opted for other arrangements.
ESPN’s well-publicized hemorrhaging of subscribers peaked in recent months, greatly hindering the Bristol-based giant’s all-important ability to purchase sports rights.
Now, subscriber loss reached such a level that ESPN has become a financial drain on its parent-company Disney.
Other Disney TV properties have also taken hits, but ESPN’s subscription face-plant, highlighted by the earth-shattering loss of 621,000 subscribers in October, has Disney most concerned, considering that ESPN accounts for a huge portion Disney’s operating income.
Variety sheds more light:
Disney’s trials in TV reflect broader industry upheaval; at ESPN, cord-cutting and cord-shaving eating into the affiliate revenue base. Cable affiliate revenue has been the bedrock of earnings for media conglomerates, and Disney is no exception. By some estimates, ESPN accounts for as much as 30% of Disney’s operating income, and the sports powerhouse has shed 10 million subscribers in the past five years.
ESPN is, in some ways, suffering from its own success. Because of its marquee sports programming, it is by far the highest-priced cable channel for MVPDs to carry, commanding a monthly fee of more than $7 per subscriber. Disney over the years has been relentless in pushing MVPDs for steady fee increases because of ESPN’s status as a must-have channel for sports fans. Now that high cost serves as an incentive to MVPDs to leave ESPN out of smaller bundles offered for lower prices than the traditional MVPD basic package.
Meanwhile, the long-term bills for ESPN’s sports rights have skyrocketed in the past few years, due in part to renewed competition from Fox Sports and NBC Sports. That has set up a perfect storm of rising costs, softening ratings, and falling affiliate revenue.
Of course, we could offer some speculation here and say that a big reason for ESPN’s tanking numbers may have something to do with their penchant for preaching liberal causes.
ESPN execs need to stick with what brings in their viewers and stay out of social issues and political causes! Just sayin’!