There’s been plenty of discussion of the issues facing ESPN recently around their latest round of layoffs, and it’s a tough time for the company on several fronts, particularly with declining subscribers, falling ratings, and increasing rights fees. However, something that often gets left out of this discussion is just how dominant ESPN’s position in the sports TV market remains, especially when it comes to per-subscriber fees. Business Insider’s Cork Gaines and Diana Yukari ran the numbers for cable sports networks’ estimated annual revenue for 2017 from subscriber fees, and found that ESPN’s primary network alone not only makes the most, it makes almost seven times what its nearest competitor makes.
ESPN will rake an estimated $7.57 billion this year from those fees, which is just a massive amount of money. And interestingly enough, it’s not FS1 that’s second. It’s the NFL Network, with $1.18 billion. FS1 is close behind with $1.16 billion, while ESPN2 is fourth with $940 million (making the argument that FS1’s real competition is ESPN2 more compelling). From there, it’s a huge drop-off to Golf Channel ($340 million), NBCSN ($310 million), MLB Network ($200 million), ESPNU ($200 million), NBA TV ($180 million) and FS2 ($180 million). So if you combine ESPN, ESPN2 and ESPNU, parent corporation Disney is getting $8.71 billion annually in subscriber fees. And that’s before you consider the likes of ESPNews, ESPN Classic, the SEC Network and the Longhorn Network, or any income from advertising or other areas.
Of course, ESPN is also paying out a lot, and the biggest single factor in their ability to charge the highest per-subscriber fee ($7.21 per subscriber per month as of March) because of the demand for their live games. Those games don’t come cheap; Dave Warner of What You Pay For Sports has their live sports rights coming in at $5.596 billion this year. And that’s 63.3 per cent of their expected carriage fee income this year, up from 52.5 per cent in 2015. That’s a big part of why we’ve seen several rounds of layoffs over the last few years, with hundreds of mostly behind-the-scenes personnel losing jobs in 2013 and 2015 and then lots of on-air talent and writers getting cut this year.
However, ESPN’s carriage fee continues to rise, and we’ve been told they’re getting the same fee or better from their presence in streaming bundles (SlingTV, PS Vue, YouTube TV and more). Many of those subscribers aren’t yet accounted for in cable coverage estimates (where ESPN actually gained last month, while Fs1 fell), so there are actually even more subscriber fees coming in to Disney regularly than are shown here. Those fees may no longer be enough to let ESPN do everything they’d ideally want to, as these rounds of layoffs show, but they still give the network a dominant position in the market. And that further reinforces how hard it would be for FS1 or NBCSN to mount a real challenge to them; they may have similar subscriber estimates these days, but ESPN is still making almost seven times as much from those subscribers as FS1, and almost 25 times as much as NBCSN.
Is ESPN facing challenges today? Absolutely. But analysts’ estimates suggest the network is still profitable. The issue is that it’s not as ludicrously profitable as it used to be, and that’s posed problems for Disney’s stock price. That’s why these cuts and changes are being made, to try and improve the ESPN bottom line. But that’s about ESPN’s performance relative to its past history and relative to its role within Disney. It’s not about ESPN in comparison to any other cable sports network. As these numbers show, they still have massive revenue advantages there compared to anyone else.