Losing subscribers and dwindling ratings have become a very real concern for ESPN as more people cut the cord from cable and satellite providers, while relying on getting game information and highlights online, often through social media.
Yet fans presumably still need ESPN to see live games, such as college football and basketball, the NBA, MLB and NFL. So is the ultimate solution for the network to offer consumers an over-the-top product that isn’t tied to a cable or satellite subscription?
According to BTIG media and tech analyst Rich Greenfield, ESPN offering its programming directly to the consumer without the cable middleman wouldn’t work.
“The way ESPN works is it’s sports; it’s all sports, all the time,” Greenfield said on CNBC’s Squawk Box Monday morning. “But if you’re only a football fan, you’re not going to subscribe for the full year. There’s a lot of people who aren’t football fans. Look at ESPN’s ratings. It’s tough, especially outside of football season to get those ratings.”
When asked by Andrew Ross Sorkin if Disney CEO Bob Iger was serious when saying that the company could offer an over-the-top product, Greenfield was dubious.
“I think he’s trying to tell the Street that they are capable of doing something they would never do,” he said. “[ESPN] can certainly try, but they’ve been having a harder time getting the size of increases that they got when they signed Monday Night Football the first time. That’s when they were growing double digits on the rate side.”
On Friday (Dec. 18), Greenfield rated Disney stock as “sell,” despite the release of Star Wars: The Force Awakens, which was sure to provide a significant boost to the company’s fortunes and profits. The loss of subscribers from ESPN was too much of an issue for Disney, which made a mistake by paying too much money for sports rights based on projections that are falling well short.
While Star Wars might help 2016’s earnings, the forecast for 2017 and 2018 don’t look optimistic for growth, due largely to ESPN’s subscriber woes.
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About Ian Casselberry
Ian is a writer, editor, and podcaster. You can find his work at Awful Announcing and The Comeback. He's written for Sports Illustrated, Yahoo Sports, MLive, Bleacher Report, and SB Nation.