One of the big discussions around ESPN and ABC owner The Walt Disney Company has been how they value the linear broadcasting components of those companies at a time when they’re placing a lot of their focus on their direct-to-consumer streaming services. And this has been further bolstered by comments from within the Mouse House. That was particularly true with Disney CEO Bob Iger’s comments last summer that they were looking for “strategic partners” for ESPN and might sell off ABC.
Iger later walked back his ABC comments, saying he made those to see how potential buyers reacted. And ABC arguably wound up being more important then ever for Disney last fall, with a full season of Monday Night Football simulcasts (much-protested by the multichannel video programming distributors). That gave them in-demand programming despite the actors’ and writers’ strikes, and it boosted MNF’s season-long numbers to a since-2000 high.
ABC is also an important part overall of Disney’s current NFL deal through the 2033 season. The broadcast network shows playoff games (including Monday’s Philadelphia Eagles-Tampa Bay Buccaneers Wild Card game, alongside ESPN) and regular-season games (including the final two Saturday games each year), and will receive two Super Bowls (in the 2026 and 2030 seasons) over the run of this deal.
And beyond the NFL, ABC has been a key part of many other broadcasts and rights deals. That’s been seen with the growth of NCAA women’s sports audiences (including basketball, softball, gymnastics, and volleyball championship broadcasts there, plus regular-season and tournament broadcasts). And the network is an essential component of the just-struck deal for the NCAA’s main bundled championship package.
On the ESPN front, there’s still a lot of value to that linear network (actually, the variety of ESPN linear networks) as well (which is part of why the NFL is interested in a stake in that part of Disney). Per December Nielsen carriage estimates, the main ESPN network still had 70.2 million subscribers at that point. Yes, that’s down from 74.2 million the previous December, and it’s way down from the peak of 100.1 million in 2011.
But with the industry-leading per-subscriber fee (an estimated $10 in fall 2022) and with continued eventual success in even difficult carriage battles, ESPN’s still making a lot of money from linear subscribers. And that’s before you consider their viewership and the ratings and advertising impact that brings. (And, as the outrage around a Peacock-exclusive NFL playoff game this week shows, there are still a lot of people who are attached to MVPD bundles and critical of over-the-top, direct-to-consumer offerings.)
So with all that in mind, it’s interesting to hear linear-specific comments from key Disney advertising figures. And Disney Advertising president Rita Ferro made a number of those recently, first in a LinkedIn Live session with Future of TV Global’s Justin Lebbon on Jan. 4 and then in the company-wide Disney Advertising Global Tech & Data Showcase at the Consumer Electronics Show in Las Vegas on Jan. 10.
To start with, in the LinkedIn Live, Ferro said while much of the talk is around streaming endeavors like the current Disney bundle and the upcoming full direct-to-consumer ESPN, linear remains a vital platform for the company. And she said that will continue even as their DTC services grow.
“I don’t think linear becomes irrelevant. There is still a business for linear,” Ferro said. “We know the importance of linear as part of our overall ecosystem.”
She said it’s also important to keep in mind that while there are subscriber losses across pay-TV channels, they’re not all declining at the same rate. And Disney channels (particularly ESPN) have done well there in carriage negotiations.
“Linear is declining, not all linear’s declining equally.’
Part of the linear equation is about the simultaneous audiences those channels (especially broadcast ABC) still can draw. Ferro made some comments here on how sports programming is particularly effective for bringing in simultaneous viewership numbers, which can be appealing to advertisers.
“Sports in particular drives simultaneous watching of content,” Ferro said. “When we have concurrent viewership, it creates more of a cultural moment. …Sports is really one of those great opportunities.”
And that may lead to a further emphasis on sports on not-entirely-sports networks like ABC, and to a further emphasis on scripted content with a longer shelf life on streaming (where there’s often less concurrent viewership). Ferro didn’t commit to anything specific there but said the current mix of content across Disney’s linear and streaming platforms may not continue in its current form, with the company regularly evaluating what makes the most sense to run where.
“I do see a shift in how we use that real estate space, as it were, across our broadcast platforms.”
Of course, streaming is going to be a vital part of this future for Disney as well. And much of the focus in the Jan. 10 CES presentation was on that front (fitting, as that’s a tech-focused conference), with Disney CEO Bob Iger saying there that “building ESPN into the preeminent sports streaming destination” was one of the company’s four key pillars. Many executives presenting there cited the scale and quality of sports across Disney’s ESPN and ABC networks and streaming platforms during that presentation. There, Ferro took some shots at some other companies with less extensive live sports streaming rights.
“Sports is a massive part of that opportunity and no one does sports like ESPN. Being in the sports business doesn’t mean hosting a celebrity golf tournament or airing a game once a week.”
ESPN’s Chara-Lynn Aguiar (executive vice president, finance, research, strategy, and office of the chairman) was another executive featured in the CES presentation, and she had some notable things to say about their position in the sports space.
“ESPN is the preeminent digital sports platform, unmatched in size and scale. We’re the only platform with live events and content from all the major leagues, and a big part of ESPN’s success comes from our relentless commitment to innovate the fan experience.”
An interesting part of the sports streaming success cited there is a global story, but one not covered as much stateside. That would be the success Disney has found with cricket. That included Star Sports broadcasts of last fall’s 2023 Cricket World Cup on Disney+ Hotstar in host country India (and on ESPN+ in the U.S., and on some other Disney platforms elsewhere), which featured a record 55 million concurrent live streams globally. Ferro said that’s an example of Disney’s scale and reach on the streaming side.
“If you start your streaming strategy with Disney, you’re going to win.”
Ferro said another part of their streaming success comes from their in-house tech stack, much of which was picked up in their acquisition of MLB Advanced Media, but which has been further and further refined since then.
“It’s no one else’s technology, we own it,” Ferro said. “We’ve lived innovation for the past 15 years like no one else.”
But while streaming is a key focus for Disney, and an essential part of their future, linear is still quite valuable to them. An important part of that comes on the sports side, with the big events where they can draw those giant concurrent audiences proving especially valuable for advertisers. And it was notable to hear some of the comments from Ferro on how highly they still value linear, especially around big sports moments.
