ESPN announced today it is adding yet another way to digitally consume its content while expressing optimism that it would renew rights to broadcast the NBA.
ESPN is putting some games and other programming on Disney+ later this year, the details of which are forthcoming. That is in addition to the existing ESPN+, plans for a sports streaming service with Warner Bros. Discovery and Fox, and a 2025 rollout of a direct to consumer ESPN.
So that’s at least four streaming options, with the traditional linear channels remaining intact.
A first step to bringing ESPN to @DisneyPlus viewers ahead of the launch of a standalone ESPN streaming service in fall 2025
By the end of this calendar year, an ESPN tile will be added to Disney+📺 pic.twitter.com/355e0umStj
— ESPN PR (@ESPNPR) May 7, 2024
“[T[here’ll be many different access points to get the digital product to ESPN digitally; they can do so as part of a bundle of the sports services, they can do so directly from ESPN with the ESPN app, or they can do it as part of a bundle with our own services,” Bob Iger, CEO of ESPN parent Walt Disney, told investors this morning.
Commenting on the blending of some ESPN content with Disney+, Iger said, “But it’s a start in terms of essentially conditioning the audience, or subscribers to Disney+ and Hulu, the fact that sports is going to be there. And it also will help us in terms of overall engagement with our bundle. As I look ahead, I think ESPN is going to make a pivot toward digital, but without abandoning linear, so it will remain on linear if people want to get ESPN.”
Traditional media companies like Disney have been straddling the transition from linear to digital by incurring steep losses. Those losses are coming down for Disney, which reported only a quarterly $18 million loss spread among ESPN+, Hulu, Disney+ and overseas streaming units, with a $65 million loss attributed to ESPN+. Last year the products lost $659 million in the quarter. Disney expects the trio to be profitable by the fourth quarter, though a money loser in the third because of rights fees for overseas cricket content.
With ESPN making so much of its content available digitally in coming years, traditional cable providers will surely worry the plague of cord cutting might intensify and prove fatal. Sports is the glue holding the cable bundle together, and the more options to consume elsewhere other than traditional TV moves the decaying model closer to extinction.
Disney did see a decline in ESP + subscribers by a few hundred thousand to 24.8 million, a slip Disney CFO Hugh Johnston attributed to seasonality. That though does not quite mesh with the historical figures. Since launching in 2018, ESPN+ subs have grown every May until this month.
Second straight quarter of ESPN+ subscriber count declines after a peak of 26 million in Nov. 2023 pic.twitter.com/cO9yeSz7sh
— Austin Karp (@AustinKarp) May 7, 2024
What is clear is ESPN, despite the linear decline, is performing well. Total day viewership was at its highest level for April since 2012, and primetime set a record. Ad sales at ESPN were up 20 percent in the last quarter, though that was partly juiced by an extra college football game and an NFL playoff game that the year-ago quarter did not have.
Some of the boost derives from the NBA, which is close to a new set of media contracts starting after next season. ESPN is widely believed to be renewing its deal, though possibly for fewer games.
“We’re confident or optimistic, we’re going to end up with an NBA deal that will be long term in our, in our best interests and the best interests of our subscribers,” Iger said.
CFO Johnston added, “We continue to look at the NBA not only as a premium sports product, but as a sports product that has growth ahead of it. Obviously, with great demographics, we feel really good about the potential package that we will end up with, in terms of it, basically enabling ESPN… to continue to shine in the television sports business.”
Iger had little to say about the sports streaming service with Warner Bros. and Fox, both of which have earnings calls in the next two days. Fubo is suing the companies, and government regulators are reportedly looking into the nascent streamer, which does not even have a name yet.
