Is ESPN Doomed?

[Uncle Rico]

It has been discussed and maybe it's still being discussed, but Iger has been pretty adamant about wanting to keep ESPN.

We'll see.  They have been handing out contracts and shaking things up. 

[MU82]

We'll see.  They have been handing out contracts and shaking things up.

Agreed. Unlike 9-9-9, I don't get invited to sit in on internal corporate discussions.

[Uncle Rico]

Agreed. Unlike 9-9-9, I don't get invited to sit in on internal corporate discussions.

I do.  I had lunch with Bob Iger yesterday at Lambeau

[Not A Serious Person]

Last month, these graphics were in an Economist story about broadcast fees.
(The article is about the fear the Saudis will take over the sports world.)

https://www.economist.com/briefing/2023/08/10/saudi-arabia-is-spending-a-fortune-on-sport


Ownership rules are being liberalised as clubs and tournaments seek new sources of capital to stay competitive. American sports leagues are the world's best at raking in money (see chart 1). Since 2019, several big American leagues have relaxed their rules to allow minority investments by institutional investors. In July Qatar's investment authority reached a deal to buy 5% of the parent company of the Washington Wizards, an American basketball team.



Digital disruption has also finally reached live sports, which had been one of the last bastions of traditional television (see chart 2). Increasingly viewers who have "cut the cord" on television instead watch sports through streaming services which offer live games but also on-demand highlights, analysis and other digital add-ons. This digital shift is being accompanied by unexpected swirls and shifts in audiences. For example, Formula 1, once notable for having little presence in the United States, is now gaining some traction there, boosted by tie-ups with Netflix.

[Uncle Rico]

Last month, these graphics were in an Economist story about broadcast fees.
(The article is about the fear the Saudis will take over the sports world.)

https://www.economist.com/briefing/2023/08/10/saudi-arabia-is-spending-a-fortune-on-sport


Ownership rules are being liberalised as clubs and tournaments seek new sources of capital to stay competitive. American sports leagues are the world's best at raking in money (see chart 1). Since 2019, several big American leagues have relaxed their rules to allow minority investments by institutional investors. In July Qatar's investment authority reached a deal to buy 5% of the parent company of the Washington Wizards, an American basketball team.



Digital disruption has also finally reached live sports, which had been one of the last bastions of traditional television (see chart 2). Increasingly viewers who have "cut the cord" on television instead watch sports through streaming services which offer live games but also on-demand highlights, analysis and other digital add-ons. This digital shift is being accompanied by unexpected swirls and shifts in audiences. For example, Formula 1, once notable for having little presence in the United States, is now gaining some traction there, boosted by tie-ups with Netflix.

What will the next rights fee for the NFL be?  I bet multiple providers approach a billion dollars. 

[Not A Serious Person]

What will the next rights fee for the NFL be?  I bet multiple providers approach a billion dollars.

So a big cut is coming?

Annual NFL Broadcasting Rights (2022 levels)

ESPN/ABC (Monday Night) = $2.7B
Fox (Sunday NFC) = $2.29B
CBS (Sunday AFC) = 2.15B
NBC (Sunday Night) = 2.05B
YouTube (Sunday Ticket - Residential) = $2B
Amazon Prime (Thursday Night) = $1.2

Source
www.statista.com/statistics/615678/nfl-national-television-broadcast-deals/

Total Broadcasting fees = $12.39 billion

[Not A Serious Person]

SportsCenter's fight for survival: Can ESPN's flagship survive the digital age?
Threatened by social media, can SportsCenter reclaim its past glory, or is ESPN's flagship doomed to become irrelevant?

https://awfulannouncing.com/espn/can-sportscenter-survive-digital-age.html

ESPN is shrinking before our eyes, doubling down on its efforts to win the broadcast rights arms race while losing sight of the formula that made it so successful, a first-of-its-kind powerhouse capable of moving mountains.

Some of those factors are out of ESPN's control, harsh realities of a failing industry that no longer sees journalism as essential, playing fast and loose with debate shows peddling contrived takes, provocative rants pandering to the viral masses and pointed coverage (the company's East Coast bias is well-documented) framed as insider reporting. It's not the most sophisticated blueprint, undermined by audience fatigue and a newfound philosophy treating talent as expendable (June's mass exodus claimed Max Kellerman, Jalen Rose, Jeff Van Gundy and Suzy Kolber, among other high-profile departures), pawns in a high-stakes chess match pitting the newsroom—or what's left of it—against profit-minded executives obsessing over quarterly projections.

----------

SportsCenter, in all likelihood, will never be the draw it once was, but it doesn't have to be an afterthought either, a forgotten vessel aboard a sinking ship headed for the bottom of the proverbial ocean. The SportsCenter brand is well worth protecting, a treasured relic of a time when highlights were king and the anchors who read them were treated as royalty, triumphant conquerors who swept us off our feet with humor and gravitas in equal proportion. Maybe that ship has sailed, never to return, but hopefully there's a life raft in sight, a rescue boat waiting to ferry SportsCenter back to dry land.

[WhiteTrash]

SportsCenter's fight for survival: Can ESPN's flagship survive the digital age?
Threatened by social media, can SportsCenter reclaim its past glory, or is ESPN's flagship doomed to become irrelevant?

https://awfulannouncing.com/espn/can-sportscenter-survive-digital-age.html

ESPN is shrinking before our eyes, doubling down on its efforts to win the broadcast rights arms race while losing sight of the formula that made it so successful, a first-of-its-kind powerhouse capable of moving mountains.

Some of those factors are out of ESPN's control, harsh realities of a failing industry that no longer sees journalism as essential, playing fast and loose with debate shows peddling contrived takes, provocative rants pandering to the viral masses and pointed coverage (the company's East Coast bias is well-documented) framed as insider reporting. It's not the most sophisticated blueprint, undermined by audience fatigue and a newfound philosophy treating talent as expendable (June's mass exodus claimed Max Kellerman, Jalen Rose, Jeff Van Gundy and Suzy Kolber, among other high-profile departures), pawns in a high-stakes chess match pitting the newsroom—or what's left of it—against profit-minded executives obsessing over quarterly projections.

----------

SportsCenter, in all likelihood, will never be the draw it once was, but it doesn't have to be an afterthought either, a forgotten vessel aboard a sinking ship headed for the bottom of the proverbial ocean. The SportsCenter brand is well worth protecting, a treasured relic of a time when highlights were king and the anchors who read them were treated as royalty, triumphant conquerors who swept us off our feet with humor and gravitas in equal proportion. Maybe that ship has sailed, never to return, but hopefully there's a life raft in sight, a rescue boat waiting to ferry SportsCenter back to dry land.

Interesting. Speaking for myself, I have probably watch SC more than any other show in my lifetime. I haven't watch SC in about 5 years.

[Uncle Rico]

So a big cut is coming?

Annual NFL Broadcasting Rights (2022 levels)

ESPN/ABC (Monday Night) = $2.7B
Fox (Sunday NFC) = $2.29B
CBS (Sunday AFC) = 2.15B
NBC (Sunday Night) = 2.05B
YouTube (Sunday Ticket - Residential) = $2B
Amazon Prime (Thursday Night) = $1.2

Source
www.statista.com/statistics/615678/nfl-national-television-broadcast-deals/

Total Broadcasting fees = $12.39 billion

You're right, they'll probably approach a trillion dollars in my lifetime

[Jockey]

ESPN will be on the same scrap heap as Apple.

[The Hippie Satan of Hyperbole]

SportsCenter's fight for survival: Can ESPN's flagship survive the digital age?
Threatened by social media, can SportsCenter reclaim its past glory, or is ESPN's flagship doomed to become irrelevant?

https://awfulannouncing.com/espn/can-sportscenter-survive-digital-age.html

ESPN is shrinking before our eyes, doubling down on its efforts to win the broadcast rights arms race while losing sight of the formula that made it so successful, a first-of-its-kind powerhouse capable of moving mountains.

This is really an odd sentence.  The circumstances that made SportsCenter such a "powerhouse" no longer exist.  The reason that they are doubling down on rights fees is that live sports continues to draw more eyeballs than anything else.

The article reeks of nostalgia for a past that's never returning.

[Skatastrophy]

ESPN will be on the same scrap heap as Apple.

Both of them sell things that have become commoditized. Sports news and broadcast has been federated. Apple doesn't make anything that's really better than their competitors. Apple, compared to ESPN, has established themselves as a luxury brand so their marketing will carry. Dunno what ESPN has to fall back on?

[Not A Serious Person]

Let me tie up some of my posts into one idea.

The business model of cable TV is everyone pays for everything. ESPN charges $9/month to all 76 million subscribers they currently have (they had about 110 million about ten years ago.) So even if we get excited that Monday Night Football had 23 million viewers, the highest week 1 in 8 years, that means 53 million subscribers are paying ESPN for that game and did not watch it.

So, they are cutting the cord and narrowly subscribing to only the streaming services that want and nothing more. In some cases, many subscribe for a month to binge a show and then cancel.
https://hbr.org/2023/07/tackling-the-problem-of-subscribers-who-bingethen-bail

ESPN pays $2.7 billion/year for Monday Night Football. So some math:

76 million x $9/month = $684 million a month in revenues
The NFL season is roughly five months, or 18 weeks (17 games plus the bye week).

So, ESPN's revenues are $3.4 billion over these five months.  $2.7 billion of this revenue goes to the NFL for the rights to three hours of programming a week (listed in a post below).

During these five months, ESPN still has to pay the broadcast rights for baseball (for one month), the US Open (tennis), golf, the NBA, college football, college basketball, hockey, motorsports, and so on.

They also get advertising revenue, just 20% to 30% of their total revenue ($600 million to $900 million). Add production costs for everything ESPN does during these five months, and they are not making money. This is why Disney's stock has been tanking for the last few years.

What went wrong? Cord cutting. They never expected it to be this big, and now it is accelerating to a record pace, and for the first time, ESPN's revenues are falling (before, it was just slowing growth rates). But broadcast rights are not falling. Worse, advertising revenue will also fall with the smaller total subscriber audiences.

https://variety.com/2023/tv/news/cord-cutting-all-time-high-q1-2023-pay-tv-losses-1235610939/

What is the solution? Since they have given up on getting cable TV subscribers to grow again, it is to get out of the pay-TV (or cable) business and into the streaming business. This means charging only for what you watch. This is a bad deal for sports fans  (everyone here) as they were "free-riders" in the current system, getting non-watchers to pay the vast majority of the broadcast rights so they can binge on sports cheaply.

This means sports fans might all be asked to pay $250 to $300/year for the NFL. $100/year for MLB. $150 per year for the NBA, $50 to $100 per year for college football, $25 to $50 per year for college basketball, and so on.

As I noted above, 60% of the population has less than $10k in savings. They cannot afford any of this. Only a few million can pay these numbers. So, sports programming is going to change fundamentally.

The lynchpin in the move to streaming is ESPN. Below, Disney is looking to jettison the ABC TV network. This is a precursor to selling ESPN. Who is going to buy ESPN? They are talking to the NFL, NBA, and MLB about buying it (Hey, NFL, you want your $2.7 billion fee for Monday Night Football? Here you take ESPN and make it work, we're out). If the sports leagues do take ESPN, who are the experts they can hire to make it work? The current executives at ESPN cannot make it work now!  Vicious cycle.

-----

September 14, 2023
Disney Holds Initial Talks on Sale of ABC to Local Broadcaster Nexstar
https://www.bloomberg.com/news/articles/2023-09-14/disney-is-said-to-hold-initial-talks-on-sale-of-abc-to-nexstar

Walt Disney Co. has held exploratory talks about selling its ABC network and TV stations to local broadcaster Nexstar Media Group Inc., according to people familiar with the discussions.

The talks are preliminary and haven't involved a specific valuation, according to one of the people, who asked not to be identified because the discussions aren't public. Nexstar would only be interested at the right price.

A spokesperson for Nexstar declined to comment. Disney declined to comment.

[Uncle Rico]

Let me tie up some of my posts into one idea.

The business model of cable TV is everyone pays for everything. ESPN charges $9/month to all 76 million subscribers they currently have (they had about 110 million about ten years ago.) So even if we get excited that Monday Night Football had 23 million viewers, the highest week 1 in 8 years, that means 53 million subscribers are paying ESPN for that game and did not watch it.

So, they are cutting the cord and narrowly subscribing to only the streaming services that want and nothing more. In some cases, many subscribe for a month to binge a show and then cancel.
https://hbr.org/2023/07/tackling-the-problem-of-subscribers-who-bingethen-bail

ESPN pays $2.7 billion/year for Monday Night Football. So some math:

76 million x $9/month = $684 million a month in revenues
The NFL season is roughly five months, or 18 weeks (17 games plus the bye week).

So, ESPN's revenues are $3.4 billion over these five months.  $2.7 billion of this revenue goes to the NFL for the rights to three hours of programming a week (listed in a post below).

During these five months, ESPN still has to pay the broadcast rights for baseball (for one month), the US Open (tennis), golf, the NBA, college football, college basketball, hockey, motorsports, and so on.

They also get advertising revenue, just 20% to 30% of their total revenue ($600 million to $900 million). Add production costs for everything ESPN does during these five months, and they are not making money. This is why Disney's stock has been tanking for the last few years.

What went wrong? Cord cutting. They never expected it to be this big, and now it is accelerating to a record pace, and for the first time, ESPN's revenues are falling (before, it was just slowing growth rates). But broadcast rights are not falling. Worse, advertising revenue will also fall with the smaller total subscriber audiences.

https://variety.com/2023/tv/news/cord-cutting-all-time-high-q1-2023-pay-tv-losses-1235610939/

What is the solution? Since they have given up on getting cable TV subscribers to grow again, it is to get out of the pay-TV (or cable) business and into the streaming business. This means charging only for what you watch. This is a bad deal for sports fans  (everyone here) as they were "free-riders" in the current system, getting non-watchers to pay the vast majority of the broadcast rights so they can binge on sports cheaply.

This means sports fans might all be asked to pay $250 to $300/year for the NFL. $100/year for MLB. $150 per year for the NBA, $50 to $100 per year for college football, $25 to $50 per year for college basketball, and so on.

As I noted above, 60% of the population has less than $10k in savings. They cannot afford any of this. Only a few million can pay these numbers. So, sports programming is going to change fundamentally.

The lynchpin in the move to streaming is ESPN. Below, Disney is looking to jettison the ABC TV network. This is a precursor to selling ESPN. Who is going to buy ESPN? They are talking to the NFL, NBA, and MLB about buying it (Hey, NFL, you want your $2.7 billion fee for Monday Night Football? Here you take ESPN and make it work, we're out). If the sports leagues do take ESPN, who are the experts they can hire to make it work? The current executives at ESPN cannot make it work now!  Vicious cycle.

-----

September 14, 2023
Disney Holds Initial Talks on Sale of ABC to Local Broadcaster Nexstar
https://www.bloomberg.com/news/articles/2023-09-14/disney-is-said-to-hold-initial-talks-on-sale-of-abc-to-nexstar

Walt Disney Co. has held exploratory talks about selling its ABC network and TV stations to local broadcaster Nexstar Media Group Inc., according to people familiar with the discussions.

The talks are preliminary and haven't involved a specific valuation, according to one of the people, who asked not to be identified because the discussions aren't public. Nexstar would only be interested at the right price.

A spokesperson for Nexstar declined to comment. Disney declined to comment.

NFL could sell rights to Apple

[Not A Serious Person]

NFL could sell rights to Apple

Is the assumption here that they are a massively large company, so they will overpay for the rights? In other words, we expect them to act like drunken sailors when spending money because they are big?

If so, why? Does Apple need to garner attention because so many people do not know they offer TV shows? That is why would overpay to attract attention to yourself.

I think it is more likely that a AMC or Showtime gamble their future by overpaying in hopes it gets them tons of new subscribers. (but I do now expect either to do that)

[Hards Alumni]

Let me tie up some of my posts into one idea.

The business model of cable TV is everyone pays for everything. ESPN charges $9/month to all 76 million subscribers they currently have (they had about 110 million about ten years ago.) So even if we get excited that Monday Night Football had 23 million viewers, the highest week 1 in 8 years, that means 53 million subscribers are paying ESPN for that game and did not watch it.

So, they are cutting the cord and narrowly subscribing to only the streaming services that want and nothing more. In some cases, many subscribe for a month to binge a show and then cancel.
https://hbr.org/2023/07/tackling-the-problem-of-subscribers-who-bingethen-bail

ESPN pays $2.7 billion/year for Monday Night Football. So some math:

76 million x $9/month = $684 million a month in revenues
The NFL season is roughly five months, or 18 weeks (17 games plus the bye week).

So, ESPN's revenues are $3.4 billion over these five months.  $2.7 billion of this revenue goes to the NFL for the rights to three hours of programming a week (listed in a post below).

During these five months, ESPN still has to pay the broadcast rights for baseball (for one month), the US Open (tennis), golf, the NBA, college football, college basketball, hockey, motorsports, and so on.

They also get advertising revenue, just 20% to 30% of their total revenue ($600 million to $900 million). Add production costs for everything ESPN does during these five months, and they are not making money. This is why Disney's stock has been tanking for the last few years.

What went wrong? Cord cutting. They never expected it to be this big, and now it is accelerating to a record pace, and for the first time, ESPN's revenues are falling (before, it was just slowing growth rates). But broadcast rights are not falling. Worse, advertising revenue will also fall with the smaller total subscriber audiences.

https://variety.com/2023/tv/news/cord-cutting-all-time-high-q1-2023-pay-tv-losses-1235610939/

What is the solution? Since they have given up on getting cable TV subscribers to grow again, it is to get out of the pay-TV (or cable) business and into the streaming business. This means charging only for what you watch. This is a bad deal for sports fans  (everyone here) as they were "free-riders" in the current system, getting non-watchers to pay the vast majority of the broadcast rights so they can binge on sports cheaply.

This means sports fans might all be asked to pay $250 to $300/year for the NFL. $100/year for MLB. $150 per year for the NBA, $50 to $100 per year for college football, $25 to $50 per year for college basketball, and so on.

As I noted above, 60% of the population has less than $10k in savings. They cannot afford any of this. Only a few million can pay these numbers. So, sports programming is going to change fundamentally.

The lynchpin in the move to streaming is ESPN. Below, Disney is looking to jettison the ABC TV network. This is a precursor to selling ESPN. Who is going to buy ESPN? They are talking to the NFL, NBA, and MLB about buying it (Hey, NFL, you want your $2.7 billion fee for Monday Night Football? Here you take ESPN and make it work, we're out). If the sports leagues do take ESPN, who are the experts they can hire to make it work? The current executives at ESPN cannot make it work now!  Vicious cycle.

-----

September 14, 2023
Disney Holds Initial Talks on Sale of ABC to Local Broadcaster Nexstar
https://www.bloomberg.com/news/articles/2023-09-14/disney-is-said-to-hold-initial-talks-on-sale-of-abc-to-nexstar

Walt Disney Co. has held exploratory talks about selling its ABC network and TV stations to local broadcaster Nexstar Media Group Inc., according to people familiar with the discussions.

The talks are preliminary and haven't involved a specific valuation, according to one of the people, who asked not to be identified because the discussions aren't public. Nexstar would only be interested at the right price.

A spokesperson for Nexstar declined to comment. Disney declined to comment.

Disney's stock has tanked because the bought Fox foolishly and have way overspent on their streaming services.  Selling their network TV holdings would be smart because I can't name a single person under 50 that watches anything on network TV other than sports.

[Not A Serious Person]

This story says sports will stay on cable (Pay) TV (second part below). The first part also explains how cable companies get paid (the first part below), as I explained in my long post above.

Not answered is if cable is losing 5 million a year, as said below (meaning that ESPN loses $540 million/year in revenue), who is paying the broadcast rights? Who is paying the NFL $2.7 billion/year for the rights to Monday Night Football?

The answer is a smaller and smaller pool of cable subscribers. So, they will have to keep raising prices, driving more people to streaming.

Death spiral

----------------



September 14, 2023
Cable TV Is on Life Support, but a New Bundle Is Coming Alive
Cable companies have started to figure out a way to stay in the TV game: Reselling streaming services.
https://www.nytimes.com/2023/09/14/business/media/cable-tv-bundle-streaming.html

For more than a half-century, the cable-TV bundle was one of the best businesses in the history of media. TV giants like Disney were paid twice: first by cable distributors, which shelled out billions every year to have channels like ESPN available for their subscribers, and then by advertisers, which opened their wallets to promote products alongside the hottest shows.

The bundle was also good for the cable providers, which steadily added subscribers: At the peak of traditional cable in 2012, more than 100 million Americans paid for the bundle.

That era is gone. Now, about five million people abandon cable TV every year — leaving about 75 million Americans in the traditional TV ecosystem, according to analyst estimates.

--------------------

Mr. Freston noted that live sports and news programming, which have yet to be completely replicated by streaming services, remained vital to the pay-TV bundle. National Football League games, an entertainment mainstay for tens of millions of Americans, will remain on traditional television for years because of existing contracts, guaranteeing a lifeline for cable providers.

But streamers are starting to encroach on that territory, too. Amazon and YouTube are making inroads with N.F.L. fans by securing football rights, and Apple has begun to show Major League Baseball and Major League Soccer matches.

[forgetful]

Crazy thing is this is now an 8-page thread, where the post title and whole concept can be answered quietly simply.

Is ESPN Doomed?

No!

[Not A Serious Person]

Crazy thing is this is now an 8-page thread, where the post title and whole concept can be answered quietly simply.

Is ESPN Doomed?

No!

Defined doomed. 

[Jockey]

Crazy thing is this is now an 8-page thread, where the post title and whole concept can be answered quietly simply.

Is ESPN Doomed?

No!

Obviously, most of us see that. Heisy is still pissed at 'em for firing Rush, so he will never let this go. There are many more long winded posts to come.

[TSmith34, Inc.]

Obviously, most of us see that. Heisy is still pissed at 'em for firing Rush, so he will never let this go. There are many more long winded posts to come.

Rush is definitely doomed. His new flame, Tuckems, is pretty obviously doomed in a different way.

[MU82]

From The Athletic:

Max and Warner Bros. Discovery Sports announced a Bleacher Report Sports add-on tier that will allow subscribers to watch live sports. Here's what you need to know:

The option allows viewers to see live coverage of MLB, NHL, NBA, the NCAA Tournament and U.S. Soccer events in addition to studio shows like "Inside the NBA." Max and Warner Bros. Discovery Sports said more than 300 live events — including the MLB and NHL postseasons — will be available.

NBA fans will be able to watch opening night and regular season action, the inaugural NBA In-Season Tournament, NBA All-Star events and part of the postseason.

The add-on will launch Oct. 5 and be included until Feb. 29 before users are charged $9.99 per month.

[WhiteTrash]

Defined doomed.

I'd say that is a good question. Could ESPN end up like CNN?

[ZiggysFryBoy]

I'd say that is a good question. Could ESPN end up like CNN?

ESPN+ lasted more than 3 weeks.

Advantage:  ESPN.

[Not A Serious Person]

I'd say that is a good question. Could ESPN end up like CNN?

Definition of doomed
(I'm old enough to remember the early 1990s when CNN was a primary reason people wanted to ditch the antenna for cable)

September 20, 2023
https://www.thestreet.com/entertainment/cnn-recorded-the-lowest-key-demo-primetime-ratings-in-network-history

CNN garnered just 55,000 viewers for its coveted weekend lineups, which include "State of the Union with Jake Tapper and Dana Bash," and "Fareed Zakaria GPS."

Its Sunday primetime shows, which include "The Whole Story with Anderson Cooper" and "Stanley Tucci: Searching for Italy," fared worse, bringing in just 43,000.

The key demo is considered viewers between the ages of 25-54 and is highly coveted by advertisers and network bosses.

The ratings, which were first recorded online in 1991, are CNN's worst since the ratings began being tracked in '91.