OT: ESPN / Digital Disruption

[RunInRed 16,413]

A fascinating read on ESPN and the future of cable-TV.

Quote

Five years later the network’s profits are shrinking, and the 10,000-square-foot SportsCenter studio has already begun to look like a relic. The show’s formula, in which well-fed men in suits present highlights from the day’s games with Middle-American charm, is less of a draw now that the same highlights are readily available on social media. Viewership for the 6 p.m. edition of SportsCenter, a bellwether for the franchise, fell almost 12 percent from 2015 to last year, according to Nielsen. Keith Olbermann, the SportsCenter-host-turned-political-commentator, put it bluntly on a podcast last year: “There’s just no future in it.”

SportsCenter is only part of the problem. ESPN has lost more than 12 million subscribers since 2011, according to Nielsen, and the viewership erosion seems to be accelerating. Last fall, ESPN lost 621,000 subscribers in a single month, the most in the company’s history. The losses have helped depress Disney’s stock price—down 7 percent since August 2015, despite a big jump in the company’s film revenue thanks to a string of hits, including the latest Star Wars film, Rogue One. John Malone, the cable entrepreneur and chairman of Liberty Media Corp., has publicly suggested that Disney would be better off selling ESPN.

As subscribers leave the network, and often cable altogether, ESPN is stuck with rising costs for the rights to broadcast games. Programming costs will top $8 billion in 2017, according to media researcher Kagan. Most of that money goes to rights fees through deals that extend into the next decade. Last year profits from Disney’s cable networks, of which ESPN is the largest, fell for the first time in 14 years. The dip was small, about half a percent, but nonetheless alarming. Rich Greenfield, a media analyst at BTIG Research, says ESPN has been “over-earning,” with cable customers paying for the channel as part of their subscription bundle, whether they watch it or not. “It’s pretty clear that the years of over-earning are going to end,” says Greenfield, who’s made a name for himself as an ESPN naysayer. “The question is does it end slowly or fast.”

Greenfield’s analysis is popular, especially with new media types, but it makes people in Bristol touchy. “I’m really tired of being painted as some sort of failing, sinking ship,” SportsCenter anchor Scott Van Pelt told the Washington Postin September. “It’s not like we’re losing money, we’re just not making as much. It’s a giant difference.”

ESPN still towers over its rivals in cable programming. Short of criminal enterprise, few business models in the world have been as lucrative. A typical cable (or satellite) bundle costs about $100 per household. In simplified form, when a customer sends in a monthly payment, the cable company sends a cut to each channel included in this bundle. Some channels get paid more than others, and ESPN gets the most. Carriers pay an average of $7.21 per month for every customer who gets ESPN as part of a bundle, according to Kagan. Fox News, by comparison, gets $1.41; Bravo, 30¢.

With almost 90 million homes still getting ESPN, that adds up to $7.8 billion per year. Sister channel ESPN2 chips in an additional billion, and that’s all before ad revenue (roughly $2.6 billion a year, according to Kagan) and revenue from the print magazine and website, which is the most trafficked in sports. Last year, Disney’s cable networks brought in $16.6 billion in revenue and $6.7 billion in operating profit—43 percent of Disney’s total and more than its theme parks and movie studios combined.

In some respects, the challenges facing ESPN are the same that confront every other media company: Young people simply aren’t consuming cable TV, newspapers, or magazines in the numbers they once did, and digital outlets still aren’t lucrative enough to make up the deficit.

But while most of ESPN’s TV peers have courted cord cutters—CBS and Turner Broadcasting, for instance, are allowing anyone to watch some of their March Madness games online for free—ESPN’s view cuts against the conventional wisdom in new media. “Everything we do supports the pay television business,” says John Kosner, the network’s head of digital and print media. The strategy, simply put: Defend the cable-TV bundle at all costs.

READ MORE: https://www.bloomberg.com/news/features/2017-03-30/espn-has-seen-the-future-of-tv-and-they-re-not-really-into-it

Any cord cutters out there?

[AUBwins 10,075]

Great article. I used to wish on having an ESPN only bundle and not have to pay for channels I would not watch.  I now know why ESPN never offered a streaming channel just for ESPN bundles.  The example of $15 month (which is more than I would have wanted to pay) would be difficult for ESPN to make up the amount of subscribers needed to cover the rights of offerings they have put themselves in.  ESPN is not what it used to be nowadays anyways.  SEC Network showing sports other than football is the only real reason I even watch an ESPN channel.  I love Sling TV.  It is a perfect blend for my family, and they keep your current rates if they raise the cost until you change your subscription.

[Barnacle 9,064]

I cut the cords about a year ago. I haven't missed cable, but I do miss the DVR. 

On the other hand, we also cheat. I use my brother in laws DirecTV password to get watch ESPN on my Roku. 

[ellitor 33,094]

5 minutes ago, Barnacle said:

I cut the cords about a year ago. I haven't missed cable, but I do miss the DVR. 

On the other hand, we also cheat. I use my brother in laws DirecTV password to get watch ESPN on my Roku. 

How are you getting quality internet?

[Barnacle 9,064]

Just now, ellitor said:

How are you getting quality internet?

Through WOW, we get about 100mbps. Watch ESPN streams almost flawlessly in HD. 

[AU64 10,122]

IF cable ever unbundles, ESPN is doomed.  Right now, they still get about $8-10 per subscriber whether people watch it or not. Sooner or later, ESPN is gonna be dropped from the "basic package" for some cable companies and the red ink will really start to flow.  I mean, who can stand most of the former athletes who make up their panel discussions these days?

[WDE_OxPx_2010 5,297]

ESPN has also gone WAY left. They've made sports into a social and political commentary, which is the very thing that sports is designed to provide an escape from.

 

I avoid the ESPN spread of original shows. It's not just goofy good natured highlights anymore. It's too much opinion.

[Jgarrett7 957]

4 hours ago, WDE_OxPx_2010 said:

ESPN has also gone WAY left. They've made sports into a social and political commentary, which is the very thing that sports is designed to provide an escape from.

 

I avoid the ESPN spread of original shows. It's not just goofy good natured highlights anymore. It's too much opinion.

This is why I quit watching. If I want political garbage I'll turn on CNN. Sportcenter is now 10% highlights and 90% talking heads. No thanks. 

[AU64 10,122]

7 minutes ago, Jgarrett7 said:

This is why I quit watching. If I want political garbage I'll turn on CNN. Sportcenter is now 10% highlights and 90% talking heads. No thanks. 

I quit watching anything that smacks of sports commentary on ESPN and most other stations too...including SEC.  I have a feeling that NCAA is part of the issue....the most PC organization around.....succeeded in blackmailing the state of NC over the "bathroom bill"...and no matter how one feels about that particular issue, it's kind of scary that NCAA has the power to do that.  Who knows what their next political goal will be and ESPN seems to be a willing partner. 

 

[icanthearyou 4,463]

I don't believe the issue for ESPN is limited to "cord cutting".  I think the answer also lies in some of these inane political comments.  ESPN doesn't cover the fastest growing sport in America, politics.  The typical American's view of politics is disturbing.  Issues aren't as important as the beloved, Red/Blue team.  

The sheep love this new sport.  ESPN might want to consider a new format, particularly with Trump in office.  YUUUGE ratings.

[AU64 10,122]

2 minutes ago, icanthearyou said:

I don't believe the issue for ESPN is limited to "cord cutting".  I think the answer also lies in some of these inane political comments.  ESPN doesn't cover the fastest growing sport in America, politics.  The typical American's view of politics is disturbing.  Issues aren't as important as the beloved, Red/Blue team.  

The sheep love this new sport.  ESPN might want to consider a new format, particularly with Trump in office.  YUUUGE ratings.

Not to get too political in this page but if ESPN insists on taking sides in today's strongly divided political world, one way or the other they are going to chase off a substantial number of their eyeballs. I'm just guessing that the more than go negative on Trump, the more viewers they lose.  JMO...no facts to support that.

[augolf1716 21,170]

Lets drop the political talk please. Thank you

[icanthearyou 4,463]

3 minutes ago, AU64 said:

Not to get too political in this page but if ESPN insists on taking sides in today's strongly divided political world, one way or the other they are going to chase off a substantial number of their eyeballs. I'm just guessing that the more than go negative on Trump, the more viewers they lose.  JMO...no facts to support that.

I think you missed the point.

[ellitor 33,094]

4 hours ago, augolf1716 said:

Lets drop the political talk please. Thank you

It's kinda hard to. ESPN has become politics with a side of sports.

[AUDub 11,149]

1 hour ago, ellitor said:

It's kinda hard to. ESPN has become politics with a side of sports.

I haven't really paid attention to it. I know they've moved to the left editorially, I just never see it, but that's probably because I rarely watch any of their content other than games and the occasional 30 for 30. SportsCenter hasn't been relevant for a while since you can get all of your highlights online and their talking head show's just don't appeal to me. I simply don't watch it when Stephen A. or Jemele Hill are on there, and I can't imagine there are thousands of TV viewers who dislike Smith so much that they didn't simply change the channel because he said something that might hurt their fee fees, but rather cancel their cable or satellite entirely.

And ESPN is probably the mitigating factor keeping the rate of users subscribed to cable and satellite from going into complete free fall. One of the main reasons people are hesitant about cord cutting is live sports. Live sports are pretty much the one genre that can't be fully accessed without cable. I know I'd personally drop DirecTV if it weren't for ESPN and the SEC network. Everything else I watch I could find elsewhere.

[AUDub 11,149]

6 hours ago, AU64 said:

Not to get too political in this page but if ESPN insists on taking sides in today's strongly divided political world, one way or the other they are going to chase off a substantial number of their eyeballs. I'm just guessing that the more than go negative on Trump, the more viewers they lose.  JMO...no facts to support that.

It has very little to do with ideology. It's economics. Their distribution method must change. Cable in general is getting ridiculous and folks are cutting the cord. ESPN is clinging to an old dying model because the next model, the al a carte subscription model, won't make them as much money, but the way people get video content has changed and will continue changing pretty significantly in the near future.

Are their some folks who only have cable for ESPN who might drop it due to politics? Maybe, but they are statistically insignificant.

[GwillMac6 20,683]

Ratings have been going down across all levels of tv across the board for a long time really. It is not just a ESPN issue it is a tv issue. Broadcast ratings for the big 4 are significantly down. They will keep going down as well. DVR and cord cutters are the reason for that. The bubble has officially popped in sports. It will be very interesting to see the new tv deals when the contracts are up. This is going to affect sports leagues revenue because they are getting BILLIONS in tv rights. Only the NFL probaly can demand a deal that was higher than their last one once they are up.

[aubearcat 2,137]

Back in the day, I loved watching SC when Kenny Mayne and Keith Olberman were the anchors. Now, I only rarely watch ESPN and when I do, it's generally specialized shows like NFL live or MLB programming. 

 

Edit- I like your Kershaw pic Mac. Dodgers and Red Sox, that's what's up. 

[jared52 4,354]

Cord cutter here. Cost was a big reason we unsubscribed from cable, but we do use SlingTV (Orange package) and their sports pack so we get ESPN. Since 2010, we only watch live games. ESPN used to be fun. It no longer is. It used to be analysis for the sports they covered, it no longer is. It's MSNBC/Fox News/TMZ news about sports. I get better analysis here and on Twitter. 

[WarTiger 3,901]

I only watch espn when there's a live sporting event that I care about.  College sports ONLY.  Tonight Auburn is on ESPN and ESPNU with softball and baseball.   The only thing I watch on espn that isn't a live sport is college game day in the fall.  Even that isn't as good as it used to be and if I have something to do around the house before the Auburn game comes on, I'm likely to not watch that either.   Oh, and I absolutely DETEST their self promoting commercials with pro sports figures.  Absolutely HATE IT.   I'm guessing they do that because its commercial time they couldn't find a buyer for.  Maybe they think they are funny?  Who knows. But, I can't stand those "commercials".      I used to watch sportscenter for the days highlights.  But, 2 things took me away from that.  1. I hate pro sports (except hockey).  2. I hate politics and don't want that garbage as part of my sports highlight show..  I haven't watched Sportscenter in probable 8-9 years and no desire to go back.   I probably watch the SEC Network+ and WatchESPN more than I actually watch their cable/satellite channels and of course only for LIVE sports.

[GwillMac6 20,683]

4 hours ago, aubearcat said:

Back in the day, I loved watching SC when Kenny Mayne and Keith Olberman were the anchors. Now, I only rarely watch ESPN and when I do, it's generally specialized shows like NFL live or MLB programming. 

 

Edit- I like your Kershaw pic Mac. Dodgers and Red Sox, that's what's up. 

Kershaw is my guy!!! It is why I am a Dodgers fan! Its baseball season now sir! Cannot wait for tomorrow night. Good luck to your sox and your new addition Chris Sale. Hopefully the price injury is not too serious. I saw him pitch in montgomery for the biscuits when he was with the rays organization.

[ellitor 33,094]

1 hour ago, GwillMac6 said:

Kershaw is my guy!!! It is why I am a Dodgers fan! Its baseball season now sir! Cannot wait for tomorrow night. Good luck to your sox and your new addition Chris Sale. Hopefully the price injury is not too serious. I saw him pitch in montgomery for the biscuits when he was with the rays organization.

Dodgers suck! Sox suck when they aren't playing the Stankees! Cubs Rock!

[GwillMac6 20,683]

35 minutes ago, ellitor said:

Dodgers suck! Sox suck when they aren't playing the Stankees! Cubs Rock!

lol dang E tell us how ya really feel then!

[WarTiger 3,901]

actually pro baseball in its entirety SUCKS.  As does pro basketball and pro football.  

[AUld fAUx@ 2,584]

1 hour ago, WarTiger said:

actually pro baseball in its entirety SUCKS.  As does pro basketball and pro football.  

Think I understand.

Pros suck.