On an earnings call earlier todayDisney CEO Bob Chapek sounded like someone who has clear ideas about ESPN’s total broadcast future. He told analysts and investors that “when it comes time to pull the trigger,” he believes ESPN can create “the best fan offering that will appeal to superfans who love sports” and “I think there’s no one but ESPN that can, frankly, get that out.
This isn’t the first time we’ve heard a Disney executive reference the potential of ESPN’s broadcast: Former CEO Bob Iger said in 2015 that it will happen eventually but projected the possibility to more than five years. In contrast, Chapek said that Disney is not ready to Share details of its model on how long it would take to reach profitability or the impact such a change would have on its existing ESPN cable business deals, without bothering to include distant schedules as collateral for its cable partners.
The conversation started because an analyst asked what’s stopping the company from making ESPN Plus a fully on-demand sports network. As it is, the subscription offers occasional simulcasts from ESPN’s cable networks, as well as some exclusive broadcast programming, but it can’t replace traditional ESPN for most viewers, and there’s a big reason: money. .
As Chapek acknowledged in his response, legacy linear networks like ESPN and the cable fees they bring in are “huge cash generators,” creating Disney’s hesitation to alter the existing business model too soon.
The not-so-slow collapse of cable company subscriber numbers due to cable cutting is no secret. At its peak in 2010, the US had about 105 million pay-TV households. A report in March of the Leichtman Research Group Tracking the largest cable, satellite and fiber pay-TV companies in the US saw their subscriber numbers fall by about 5.5 million in 2021 after a loss of 5.78 million in 2020, leaving their numbers for the start of 2022 at around 68.1 million.
However, he continued: “At the same time, we are very aware of our ability to enter the DTC more aggressively. [direct-to-consumer, aka streaming] ESPN area, so what we’re doing is putting one foot on the dock, so to speak, and one foot in the boat right now.”
“But what we do know is that at some point, when it’s good for our shareholders, we’ll be able to jump right into an ESPN DTC offering, in the manner that you describe, and we fully believe there is a business model there. For us, that will allow us to regain growth on ESPN Plus in a full expression of DTC.”
This is a balance that Disney has already done much to upset by shifting its focus away from cable channels with the launch of disney more, and similar to the one Warner navigates with HBO and HBO Max. Traditional pay TV setups (including online streaming like Disney’s Hulu offerings with Live TV) still have too much of an impact on Disney’s bottom line for Disney to ignore and pitch the full ESPN experience as its own. streaming subscription. as it has been for many yearsbut the point where that will change is close enough that Chapek feels comfortable openly considering the possibilities.