Disney CEO Bob Iger Embraces Streaming Future, Says ESPN Still Key

“Young consumers love live sports,” says Iger in response to investor questions on recently-trimmed ESPN

Possibly no network has benefited more from the traditional pay-TV bundle than Disney’s ESPN, which has by far the highest carriage fees of any channel at more than $7 per person. But as Americans have moved away from their fat cable bills and toward streaming services with skinnier offerings, ESPN has disproportionately suffered, shedding about 12 million subscribers since 2011 and weighing down Disney’s stock even as its studio continues its record run.

But even the mighty Mouse House has to adapt to the changing times, as Disney Chairman and CEO Bob Iger said on the company’s second-quarter earnings call Tuesday afternoon. Last week, ESPN laid off 100 on-air personalities and reporters in an attempt to get certain costs under control as the fees it pays for sports rights continue to escalate.

“We’ve been candid about the trends were seeing, which has been a key topic of discussion on these calls since 2015,” Iger said on the call.

Iger said the strength of ESPN’s brand and content has led to it being included on pretty much every major new live TV streaming service, including Dish Network’s Sling TV, Google’s YouTube TV, Hulu’s recently-announced live service and AT&T’s DirecTV Now.

“Consumer response to these offerings is very encouraging,” Iger said, predicting they would continue to make up a bigger part of the pay-TV universe.

And importantly for Disney’s shareholders, Iger said customers moving to those cable replacements which contain ESPN don’t degrade its profitability.

“From a per-sub[scriber] pricing standpoint, these new services are just as valuable to us as existing platforms,” Iger said.

Iger also said that ESPN is an essential ingredient for any new streaming TV service if it wants to get to a critical mass.

“They’ve concluded that launching new platforms without ESPN is very challenged,” Iger said. “Launching with ESPN enables them to penetrate the marketplace in ways they wouldn’t have been able to without it.”

Iger said growth in those streaming services haven’t made up for the losses from the traditional bundle, but he expects that with their combination of low price, user-friendliness and better interface, they will continue to attract demographics that have become cord-cutters and cord-nevers — particularly younger viewers.

“Live sports works on those platforms and young consumers love live sports,” Iger said. “And we’ve got the best array of them.”

Disney is also planning a standalone ESPN-branded streaming service, but Iger insisted it won’t just be the TV version available online — at least not yet.

“Will that eventually happen, I think probably, but there are no plans to currently do that,” Iger said.

Keep
Reading...

Looks like you’re enjoying reading
Keep reading by creating
a free account or logging in.