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ESPN has investors really worried

DavidEduardo said:
The issue is that the Beast puts the loss at ESPN's feet, when it is really a cable "cord cutting" problem that affects all cable channels alike.
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Interestingly, today Verizon's CFO said in a question and answer session that their "custom" TV bundles are accounting for about 1/3 of its TV customers - which means about 1.9 million people.

Totally understandable why ESPN sued Verizon - that's up to $170 million dollars in fees those 1.9 million people represent.
 
PTBoardOp94 said:
Interestingly, today Verizon's CFO said in a question and answer session that their "custom" TV bundles are accounting for about 1/3 of its TV customers - which means about 1.9 million people.

Totally understandable why ESPN sued Verizon - that's up to $170 million dollars in fees those 1.9 million people represent.
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I see an interesting case for class action if ESPN wins its suit over Verizon (Frontier). Those of us who have no use for the sports tier are being forced to pay for a service we do not need. I'd certainly send out a letter to the better known class action firms to see if anyone is interested and would be first in line to sign as member of the class.
 
The article isn't exactly correct in saying Disney doesn't "own" ESPN. Sure they don't own the teams or the leagues, but they own the channel, the name, and all it represents. They just haven't been able to monetize it as well lately. They had a series of ESPN Sports bars for a while, in some very big dollar locations like Times Square and the Vegas Strip. But the high rent ate up the profits. They could do anything they want with the ESPN name, just as they now can do a lot with the Star Wars name. It's a matter of coming up with a hit that makes a lot of money. The TV networks don't own the shows they air either. They license them for first run, and then those shows can be sold again for syndication. The success of Star Wars takes the ESPN problem off the front page for a few weeks, and that may help the stock short term. But the problem is still there. I'm sure there are a lot of other companies that would love to buy ESPN if it was on the market. That would help Disney stock the way selling its radio stations did.
 
TVCOOL said:
Maybe if ESPN merge their lesser channels then their stock will rebound.
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The press has much of this wrong in that they are singling out ESPN for what is really a cable / subscription TV issue.

With the exception of a small percentage of Verizon FiOS users who can opt out of the premium sports package, cable and satellite services include ESPN and other sports channels as part of the total (and only) basic package available. You can't just turn off ESPN to save the fee the cable system passes on to you.

So as people, particularly Millennials cut the cord on subscription TV, all the channels suffer... not just ESPN.
 
ESPN's business model is based on a rich per capita for every cable subscriber. To their credit, they've maximized their revenue in this fashion. As cable rates have risen and alternatives emerge, there are fewer subscribers thus hurting ESPNs financials. There is a limit to what even ardent sports fans would pay for ESPN as an a la carte service and many, given the opportunity, would be happy to take a $3 reduction in their cable bill to not have it.

Further, as sports content has become more dispersed, ESPN becomes less of a must have. It's still greatly profitable, but won't generate enough profit to cover up weaker performers in the Disney empire as it has been doing.
 
umfan said:
Further, as sports content has become more dispersed, ESPN becomes less of a must have. It's still greatly profitable, but won't generate enough profit to cover up weaker performers in the Disney empire as it has been doing.
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Kind of hard to do that when stockholders and investors can see division break-outs. They don't just see one number.
 
TheBigA said:
Kind of hard to do that when stockholders and investors can see division break-outs. They don't just see one number.
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Overhead can be allocated differently among divisions. One would have to dig deep into financial statements to discern that and even then, it wouldn't necessarily be apparent. Further, Disney only selectively reports divisional results, generally when they want to highlight how well one division is doing.
 
I unloaded cable over 2 decades ago and I still haven't missed a trick on live sports whether it's on ESPN, CBC, BBC or what have you.
Granted, I don't follow all sport... just the ones that interest me and I have been able to side step the need for cable for over two decades.

If Disney wants to really save it's empire they need to get into the delivery game and buy out some ISPs much like NBC/Comcast has done.
That is the future and only a fool isn't seeing it.
ESPN and later by default Disney has been controlling the pipe since 1979 with the advent and proliferation of cable.
That model is eroding much like the record companies eroded after the advent of Napster.

Verizon is set to unload FIOS to the highest bidder because they want out the conduit distribution biz and concentrate solely on wireless.
A bit foolhardy I think right now but that's exactly what they are doing.

The Internet infrastructure will look an awful lot like Canada in a few short years and that's sad.
The FCC has shown zero flex in stopping it, rather it's being encouraged through spectrum auction and the like.

Just look to Bell, Shaw and Rogers up North of the 44th Parallel... that is where we in the US are headed.
 
Here's an interesting article from 1992 about a similar crisis faced by networks and sports leagues.

Down The Tubes? Experts See Mega-tv Deals Coming To An End

Art Modell has seen the future of television sports and it is not particularly pretty.

It is filled with low ratings, anemic advertising revenue and coldhearted network executives who would sell their mothers for a profitable quarter.

"I think there's going to be a major shaking out throughout the sports world by television," warned Modell, the Cleveland Browns' owner and the longtime chairman of the National Football League's television committee. ''They're just not going to keep providing the funds for these skyrocketing salaries and demands made of them by (professional sports) ownership."

Modell's message is clear: The television networks no longer are inclined - or able - to continue serving as a cash cow for the frivolous spending car dealers, shipbuilders and real-estate magnates who own professional sports teams.

"The days of astronomical (rights fee) increases are a thing of the past," said John Severino, president of Prime Ticket cable network and former president of ABC. "The spiraling rights fees that have been a part of the past are no longer going to be a part of the future."
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http://articles.philly.com/1992-04-...nd-advertising-industries-television-networks
 
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Also no one expected ESPN to become the behemoth that it did, nor the degree to which Retransmission Consent (created in 1992) would change the industry. I'm not sure that the Cable Act of 1992 was ever actually expected to pass - sharp historians may note that the Cable Act of 1992 was vetoed by President Bush, but became law via a veto override in Congress's lame duck session.
 
My sources within the Mouse say this is pure horse hockey. They LOVE the brand of ESPN. They'd be more likely to spin off ABC.
 
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