🤔 ESPN Go From Bein’ Da Money Makah 🤑 fo’ Disney to Da Big-Headed Problem
⬇️ Pidgin | ⬇️ ⬇️ English
Back in da days, ESPN was da power boostah fo’ Disney, fueling dem through hard times, movah flops, an’ even da virus days. Was da cash from ESPN dat wen’ help Disney buy da cool kids on da block like Marvel, Lucasfilm, Pixar, and 21st Century Fox. Dem even make one streaming giant 🎥🌐 dat was like da wall holding back da tech takeover from Silicon Valley in da showbiz world.
But da good times, braddah, dem pau.
ESPN, wid da two-part money game, charging peeps for da cable 📺 and making bank on da ads, still bringing billions fo’ Disney. First half dis year, $14 billion in da pocket and $3 billion just for keep. But da Wall Street guys, dey all about growth, yeah? And da money down 6% and da profits dropping 29%, das da problem 😲.
So, what Disney doin’? Talkin’ about selling some part of ESPN, but no da whole thing. Da boss-man, Robert A. Iger, he lookin’ fo’ partners to help wid da content or maybe da distribution. 🤝 Even da big leagues like NFL, NBA, an’ MLB all in da chat.
Da situation kinda wild, so Iger wen’ bring back two big kahunas, Kevin Mayer and Thomas O. Staggs, fo’ come talk story and help out wid da ESPN plan. 🧠🗨️
But what’s next? Nobody knows fo’ sure. Need money? Need tech? Need help wid da shows? All confusing like a mixed plate lunch 🍱🍔🤷.
Da whole ESPN gig, is not hard fo’ understand. Da bulk of da cash comes from da cable guys, and last year about 71 million homes in da U.S. wen’ pay ESPN like $8.81 every month. Plus, ESPN also pullin’ in more than $2 billion annually in da ads. 💵💰
But times are changin’. Ten years ago, 100 million homes got ESPN; now, 30 million less. ESPN try to balance da loss by charging more, but by 2027, less than 50 million homes gonna pay for cable TV, according to da big number guys at PwC. 📉🏡
Da same time, ESPN’s costs getting big, like HUMONGOUS. 🚀 Paying more for da right to show NFL games, an’ soon gonna talk story wid NBA fo’ maybe one expensive new deal. Disney will pay $10.8 billion dis year fo’ sports, an’ get future commitments of $57 billion, stretching out to da 2030s. 🏟️
Plus, da cable-cutting thing, dat’s making da costs go up, and ESPN gotta cut back on da cool shows and rely on da big names, like Stephen A. Smith. Before, no layoffs, but now, six waves of ’em since 2015, includin’ some high-profile ones. 🎙️😢
Den dere’s da new era of streaming. ESPN+ shows plenny games, but da big ones, dey still on ESPN and ABC. Only 25.3 million subscribers to ESPN+, but only 5 million payin’ fo’ it. Da rest, dey getting da bundle with Disney+ and Hulu. 📱💻
So, da question: when ESPN gonna stand alone? One big obstacle is da price. If ESPN goes by itself, gonna cost maybe $40 or $50 every month to keep da money same. Da current cable bundle, if you one sports fan, das da best way fo’ watch da sports. 🎫🏟️
It’s not easy, braddahs and sistahs. It’s really not. But dat’s why dey been so slow fo’ pull da trigger. Now, we wait and watch, like da last quarter of da game. 🕓🏀
No mattah what, ESPN still got game. But like da surfer waiting for da right wave, gotta get da timing right, or wipeout. 🏄♂️💥
Stay tuned, Hawaii. Da story not pau. 🤙🌺
NOW IN ENGLISH
ESPN’s Shift: From Disney’s Financial Engine to Its Growing Problem
For nearly three decades, ESPN has been Disney’s financial powerhouse, driving the company through recessions, box office failures, and even a global pandemic. It was ESPN’s revenue that enabled Disney to make major acquisitions such as Marvel, Lucasfilm, Pixar, and 21st Century Fox. It also helped the company create a streaming service, transforming Disney into a media giant and perhaps traditional media’s last hope to fend off Silicon Valley’s intrusion into the entertainment industry.
But those days are over.
With its dual revenue stream consisting of cable subscriber fees and advertising, ESPN continues to earn billions of dollars for Disney. In the first six months of the 2023 fiscal year, Disney’s cable networks division, anchored by ESPN, generated $14 billion in revenue and $3 billion in profit.
The problem lies in growth. Revenue for those six months was down 6 percent from the previous year, and profits plunged by 29 percent.
Disney is now exploring the once-unthinkable sale of a stake in ESPN. CEO Robert A. Iger has made it clear that he doesn’t want to sell all of ESPN, but he is looking for “strategic partners that could either help us with distribution or content.” Disney has been in talks with the NFL, NBA, and MLB about acquiring a minority stake.
To underscore the urgency of the situation, Iger has enlisted two former senior Disney executives, Kevin Mayer and Thomas O. Staggs, to consult on ESPN’s strategy and help structure any potential deals.
“It is really tricky in this cord-cutting environment to see the real growth opportunities available to ESPN,” said Steve Bornstein, a former CEO of ESPN. Despite the challenges, he noted the network’s strengths, such as numerous rights to air live games, digital assets, and a popular website.
Iger’s recent comments about changes at ESPN have raised more questions than answers. What exactly is ESPN looking for in a strategic partner? Do they need money, technological help, or assistance with distribution?
Disney’s earnings report next week is expected to show an 11 percent decline in per-share profit, as the company deals with underperforming box office results, decreased attendance at Walt Disney World, and two striking Hollywood unions.
The core of ESPN’s revenue comes from affiliate fees, monthly charges that cable providers pay ESPN for the right to offer its channels to households. In 2022, around 71 million U.S. households paid for a TV package that included ESPN. Cable providers, in turn, paid ESPN an average of $8.81 per month for each home.
But cord cutting has impacted both revenue streams. A decade ago, more than 100 million households received ESPN, meaning 30 million fewer households get ESPN today than in 2013. ESPN’s ability to continue raising its affiliate fee to offset this decline will be limited in the coming years. By 2027, fewer than 50 million homes will pay for cable television, according to PwC.
At the same time, ESPN’s costs are skyrocketing. They will pay an average of $2.7 billion annually over the next decade for the right to show the NFL, a 42 percent increase from what they used to pay. They will also soon negotiate with the NBA on a potentially costly renewal of their rights agreement.
To pay for these rights, ESPN has cut back on original programming and relied more on famous personalities. After once being proud of never having layoffs, the company has seen six waves of layoffs since 2015.
ESPN’s streaming service, ESPN+, has faced its own challenges. Though it shows thousands of games annually, the most significant matchups are still reserved for ESPN and ABC. As of April, ESPN+ had 25.3 million subscribers, but only five million people paid for it directly.
The question, then, is when Disney will offer ESPN as a stand-alone streaming channel. The pricing is an enormous obstacle. If ESPN goes à la carte, they would likely have to charge $40 or $50 per month to maintain its current revenue.
“It is not easy,” said Michael Nathanson, a media analyst. “That is why they have been reluctant to do it.”
Disney’s family of sports channels currently earns more than $12 per month in affiliate fees for each cable subscription. But the future of ESPN remains uncertain, and the network must navigate the turbulent economics of the streaming era. Like a surfer waiting for the right wave, the timing must be right, or it could lead to a wipeout. The story is far from over.
