ESPN’s biggest competitor isn’t Fox Sports 1, it’s a la carte cable

You might have missed the announcement last week that Apple added the Watch Disney Channel streaming video app to its Apple TV set-top box. This came just a month or so after Apple struck a deal to add Disney's biggest streaming service, WatchESPN, to Apple TV.

Both WatchESPN and Watch Disney Channel, however, are TV Everywhere apps. That means you can only use them in conjunction with a cable, satellite, or IPTV service. If you don't have a qualifying pay TV subscription, you can't use those apps. TV Everywhere might be marketed as an enhancement to cable, but in many ways, it is designed to keep customers paying for the entire cable bundle.

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And that’s exactly how Disney wants it. As this New York Times article detailed, Disney has spent several decades and millions of dollars lobbying Congress in an attempt to fend off Senator John McCain (R – AZ) and his attempts at breaking up the cable bundle. The Times detailed many of the methods Disney and ESPN used to keep McCain at bay — including targeting Rep. Joe Barton (R – TX), Chairman of the House Energy and Commerce Committee, which oversees television legislation:

In 2004, Mr. Barton had helped derail a legislative move aimed at breaking up bundles. On Super Bowl weekend in February 2005, with the cable controversy bubbling, Disney paid to bring Mr. Barton and his wife to Walt Disney World in Orlando, Fla., records show.…

Within a few weeks, Disney and ESPN employees made donations of $7,500 to Mr. Barton’s political action committee, according to an analysis of records from the Center for Responsive Politics. Disney’s corporate PAC contributed $5,000 more, adding to the $10,000 it had donated to Mr. Barton in 2004. Over the years, Disney and ESPN executives, and the Disney PAC, have donated $58,500 to Mr. Barton and his PAC.

Barton then helped to put the kibosh on a bill McCain introduced in 2006 in an attempt to break up the cable bundle — even though a report written by FCC Chairman Kevin Martin that year revealed that à la carte cable could reduce most households’ TV bills by up to 40 percent. That $58,500 investment in 2006 helped ESPN make more than $7.3 billion in subscriber fees in 2012.

As one cable industry lobbyist told the Times, “On à la carte, there was no stronger opponent than Disney and ESPN.” Indeed, à la carte cable just might be ESPN’s biggest competition — certainly far bigger than Fox Sports 1. That’s because, thanks to the bundle, the 90 million or so customers who get Fox Sports 1 with their TV subscriptions still pay for ESPN, and at a rate of $5.54/month, according to the latest data from SNL Kagan, which far outpaces the $0.23/month that carriers forced Fox to accept last month.

In what other industry can you still get 24 times as much money from a customer who chooses your competitor’s product over your own?

That’s why Disney and ESPN are fighting to preserve the cable bundle as we know it, and why you won’t be able to use WatchESPN on your Apple TV without a pay TV subscription. There have been rumors about Apple starting its own pay TV service, but given Apple’s long history of reading the market before acting — remember that Apple wasn’t exactly first to market on MP3 players or mobile phones — we’re still years away from that. For now, if you want ESPN, it’s the bundle or nothing.

Matt Yoder

About Matt Yoder

Managing Editor of Awful Announcing and award winning sportswriter. Bloguin consigliere. The biggest cat in the whole wide world.

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