Why Disney Should Not Think About Dropping ESPN
Could Disney part ways with ESPN? This is a concept broached recently in a piece by Front Office Sports. The thinking behind the piece is that Disney wants to focus more solely on streaming content and take focus away from legacy media such as ESPN’s family of cable channels of which there are at least 5, plus a number of Internet-based services.
The initial reporting sites no named sources. Front Office Sports quoted an outlet called Puck News saying CEO Bob Chapek asked top aides to look into a possible ESPN spinoff. It also cites yet another unnamed source saying that Disney has no plans to do this. There are a number of things at work here, or better said there could be a lot of things at work here.
The cost of sports contracts between TV partners continues to rise. And in the case of regional sports networks (RSNs) many providers are choosing not to carry them. Sports-specific channels ask a lot of cable and satellite systems can be expensive. At the same time they are not as popular with the general public as networks with broader programming. Essentially if you have no interest in say a specific NHL team in your market the entire RSN would be useless. This is not the case with say NBC.
Another aspect of the idea that Disney May spin-off ESPN has to do with the ever-growing influence and presence of gambling on sports. That gambling is the future of televised sports but Disney can’t set that up because it would go against its family-friendly image. And that ESPN’s future is with a gambling company and not a multi-media giant.
But really is this something that Disney should do? Let’s take a look at a couple of things concerning this idea.
What Is Disney These Days?
Disney has a diverse media Empire at the moment. It owns one of the top streaming services in the world with Disney Plus. It owns the majority of Hulu another top streaming service. And eventually, it will Own 100% of Hulu when it fully purchases the company from Comcast. What Hulu will look like at that point is not certain.
Disney has its own cable replacement service/TV bundle called Hulu with live TV which competes against other media ventures from YouTube (YouTube TV), Dish Network (Sling TV), DirecTV (DTV Stream) and fubotv. Disney also owns ESPN and a great number of regionally-based ESPN spin-offs like the SEC Network and the ACC Network along with other iterations of ESPN such as ESPNU (college sports) ESPN news (24-7 sports news), ESPN2 (additional major league sports option), the internet subscription service ESPN+ as well as Internet supported content through ESPN3 which is and has always been a streaming service built on to subscribers for ESPN cable services.
Disney also owns traditional broadcast network ABC, cable networks the Disney Channel, Disney XD, and Freeform. This is on top of everything Disney controls as far as studio assets like Marvel, Lucas Films, Pixar, Disney’s Film Studio, Marvel Comics, 20th Century Studios otherwise formerly 20th Century Fox, the network FX and all of its offshoot channels. Am I missing anything? Probably. Oh yeah, the most popular theme parks in the world.
The point of rattling off all of these assets is not just to give the scope of Disney accents but also point out its entanglements in both Sports, traditional TV, and be growing present and future of television viewing through streaming. Stop let’s ask the question then, does Disney really want to get out of the TV network side of the TV business which is considered the driver of live TV audiences? And if it is truly looking to move away from traditional media would that also mean that Disney for the same reason will sell ABC and shutter or sell all of their other cable channels. I gues they could. But why would they. Think about what Disney would look like if it cut off ties with Legacy TV media. It would be a streaming Studio, a movie studio which if anything is a business that is in much deeper trouble than anything to do with home viewing oh, and of course a theme park entertainment Empire.
Why would it do that? Since the launch of the Disney bundle which puts together Disney Plus, Hulu’s on-demand service, and ESPN Plus each service has grown in subscriptions. Also during this time, ESPN Plus has continually added coverage of multiple sports including mixed martial arts, college sports in general including football and basketball, the Canadian Football League, Major League Baseball, NHL hockey, and so many other things that we could fill a whole page up just talking about then. This is on top of the very popular ESPN 30 for 30 documentary Sports series.
I’ve been following screaming in cord-cutting for over a decade. I am hardly an advocate for bloated Cable packages. The number of people who cancel cable will almost certainly keep rising as well the number of people who grow up that never had cable in the first place who intern are unlikely to sign up for a service later on as adults. But that does not mean that Disney’s TV assets especially ESPN are not incredibly valuable. In fact, ESPN is one of the most valuable stand-alone TV products in cable TV and in sports.
It is also one of the top sources for sports journalism in the world with a top website, magazine, podcasts and more. Will all of those industries die at some point? Maybe. But Disney should not be so short-sided that it would give up the rights to the College Football playoffs, Monday Night Football, NBA basketball and more just because the cable companies that pay Disney through the nose are losing customers. Cord-cutting is happening partially bc so much content is available on-demand and the need to see a scripted show live has seemingly evaporated. But major sports events have not fallen in that hole. People want to see it as it happens so they can be part of that collective experience or bc of (fomo), or because they do not want anything spoiled or any other number of factors not excluding the elephant in the room, gambling. Did I win money or lose it?
Unless Americans stop watching sports Disney would be out of its mind to spin-off ESPN. Why not integrate gambling into ESPN’s apps. The sports leagues don’t care about gambling as long as players and coaches don’t let it affect performance on the field. Gambling has been part of sports since people bet sheep on the first game of golf.
People looking at this situation don’t seem to understand that there are still millions of people who watch TV channels whether they are delivered via cable, satellite, antenna, high-speed Internet, or wirelessly via 5G. And Disney is a major player in that game too. Hulu with live TV is a growing asset. And right now it owns the most valuable asset in live TV, live sports. If it sold ESPN off to Draft Kings it would have to pay through the nose for access to all the content it now sells to everybody else. Would you sell your house and pay someone to rent it out from them? Unless Disney has no interest in selling live TV going forward I pose that it is more likely Disney will “spin off” their CEO than ESPN. As the live TV space gets more competitive and cutthroat Disney can squeeze every single TV provider in the country. And if a provider decides to blackout ESPN in one of those pissing matches we have grown all too familiar with, then Disney can just point out that customers can cancel their other service and sign up for Hulu with Live TV and hey add on the rest of Disney’s streaming services for a lot less then they pay for their current TV services. Or as Puck News would suggest they sell it all off to a gambling company.
Would ESPN really benefit from being owned by a gambling company? How would that affect its reputation as a sports journalism outfit? What thinking person would trust a network to report on athletes if they thought that the coverage was based on what’s best for betting lines? The company has already taken heat for being too chummy with the leagues they cover and have TV contracts with. Here is another question. Would the NFL, NBA and MLB want their TV rights owned by a gambling company? I mean maybe. But it sets major sports up for terrible scandal.
If Disney sees gambling as a way to cash in more on sports then it can follow the competition. Sling TV and fubo TV are working in more gambling coverage and gameplay into their TV apps. Hulu could add that feature to its live TV service without tying it to the actual sports channel. This could be done without turning all of ESPN’s reporters and commentators into gambling shills.
Streaming is the future of TV, but that does not mean that TV networks are dead. The thing that is dead is the market for cable being the exclusive way to get multiple TV channels. Just looking at the incredible growth of FASTS shows that people like watching TV channels just fine. They just don’t want to package them with $200.00 bills that include a home phone they don’t use. So Disney. Here is a little free advice.
Feature image from screengrab of espn.com