Executives at Disney, owner of ESPN and other networks, are trying to put a brave face on a trend that has eroded their bottom line significantly and threatens the sports giant's very business plan: cord cutting.
An article at DSL Reports recounts comments by Disney CEO Bob Iger, who claimed that the company was not at all caught off guard by the decline of its subscription base in light of cord cutting, cord shaving, and cord nevering (a term I just invented, by the way). In reality, it appears that ESPN executives were quite shocked by the declines and the reaction that recent layoffs and cutbacks has generated. Quoting the DSL Reports article:
The numbers continue to highlight a huge swath of people who don't watch sports, and are tired of paying for it. ESPN's been losing 2-4% of its subscriber base annually. And while executives like Iger and Skipper have managed to keep their jobs in the wake of their total failure to adapt, long-time reporters and writers at the company were recently laid off in droves.
It's hard for most small cable operators to imagine a world where they don't carry the suite of ESPN Networks. But that day could be coming due to one big uncertainty: what will ESPN charge in the future for its product?
Most small operators carry ESPN and other networks through the National Cable Television Cooperative, or NCTC. The master agreement for the Disney networks, including ESPN, will be in place for another 4 years (ending 7/31/2021), so until then those fees are already know. What happens on August 1, 2021? Will ESPN seek to recover the lost revenues from a shrinking subscriber base by demanding much higher rates for cable carriage? Will they decide to go over-the-top and sell directly to consumers? I'm no psychic, but it seems like there are so many ways that this could be bad for small operators who are already feeling the pinch from rising carriage fees.
What do you think is likely to happen to ESPN? Do you think your own customers are less interested in ESPN's programming than they used to be? Share your comments by clicking the link below!
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