It's a big change in philosophy for the King of Sports. After saying last year that they have no plans to offer a stand-alone ESPN streaming product, Disney executives now say they plan to launch just such a service later this year. And that move could change the landscape of cable TV as we know it.
Why the change of heart? Subscriber losses. According to an article in Barron's:
Investors and analysts appeared to be zeroing in on ESPN, which has taken a hit as more consumers opt out of cable service in favor of streaming TV options. Revenue fell 2% and operating income dropped 11% at the company’s cable network segment, which is dominated by ESPN
The real impact for cable operators could mean new freedom to package ESPN, cable's most expensive programming content, outside of the most widely distributed packages. As DSL Reports points out:
Many of ESPN's contracts with cable providers dictate that should the company offer a standalone service of its own, pay TV providers would have the right to pull ESPN out of the core channel lineup (ESPN sued Verizon for doing just that)
Obviously having the ability to move ESPN out of Basic or Expanded Basic packages and into another tier (taking with it a big chunk of programming costs) would be a big benefit to operators. They key question is whether the NCTC's master agreement with Disney-ESPN has that language in it. For confidentiality reasons I can't really say. But it would be a great question to ask Frank Hughes with the NCTC when he is at the IAMU Municipal Broadband Conference on March 22nd and 23rd (shameless plug).
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