In Sept. 2021, we debuted this newsletter with a deep dive about how within the next five years after talking to executives inside and outside the company, agents and broadcasters.
Since this topic was
back in the news last week, we figured we’d update you with the most relevant, new information.
Let’s be clear: Before we give you the latest, let’s define what we are talking about. ESPN will eventually take the mothership network direct-to-consumer, but it will still remain on cable.
The product will be a standalone service, like ESPN+, but will include all of ESPN’s programming, like “Monday Night Football,” the college football national championship and the NBA. The linear network’s distribution will be expanded so a consumer can decide to have it through cable or without.
ESPN DTC timetable: ESPN is expected to go DTC in two to three years, according to sources. It is not happening this year. And, according to sources, at this point, it is unlikely to happen next year.
That makes the earliest start date 2025, though 2026 is a possibility. It is still expected to occur within the five-year time frame we initially reported.
However…: As ESPN chairman Jimmy Pitaro has stated on numerous occasions, there is no exact timetable. Pitaro and Disney are watching the market forces. There is no specific date to report.
Cable story: In 2011, ESPN peaked at 100 million pay-TV subscribers.
That number dropped to 84 million in 2020, and then 76 million in 2021. The latest figures are down to 74 million. The magic number expected to prompt ESPN DTC’s launch is when ESPN drops to 50-60 million cable homes — which is where many experts expect cable to level off — but this is a sliding scale.
The Sunday Ticket/YouTube ESPN boon: While Disney/ESPN were in on the bidding for NFL Sunday Ticket, it was nowhere near Google-owned YouTube’s $2 billion-per-year winning offer that garnered the streaming service the package that allows out of market fans to view their teams’ Sunday afternoon games.
While Sunday Ticket is available for anyone who has YouTube TV or who doesn’t, fans with the Google-owned service can get a $100 discount off Sunday Ticket. This is tremendous for ESPN.
Every time Sunday Ticket converts a fan to YouTube TV, ESPN will get the same roughly $10 monthly fee it receives from Comcast or Charter or whomever. ESPN is paying $0 for this. Yes, this could be customers moving from cable to YouTube, which is a prevention of churn, but it also could include many who don’t currently have ESPN on a cable or satellite system.
In turn, this factor — if it converts or keeps enough folks — could slow ESPN down a little bit from offering its DTC product. The fact that YouTube TV got Sunday Ticket instead of the Apple TV was a very fortunate bounce for ESPN. It may slightly change their thinking.
Another note: ESPN will break out its earnings in November for the first time under how Disney has restructured. Despite all the haze around ESPN’s and Disney’s on-going layoffs, ESPN’s financials are expected to be very impressive for the network, according to sources.
Our thinking: I’m really starting to think when ESPN moves to direct-to-consumer, it won’t mean the end of cable. The cable bundle is going in the wrong direction, but the big argument against ESPN for years has been that the viewer who doesn’t care about sports is paying for ESPN.
Let’s say — and I’m just pulling this figure off the top of my head, so it may be too low — that half of the current 74 million subs that pay for ESPN don’t care about ESPN. Those people will not change when ESPN goes DTC.
Now, we are down to 37 million. If I’m one of those 37 million and I want to cut the cord to go to ESPN DTC, I will conceivably still want YES, MSG and SNY. YES already has a DTC offering, while MSG is now batting second and SNY will get there eventually. Those three alone will cost me around $90 per month. Let’s say ESPN is priced similarly, which gets us to $120 per month.
At this point, a cable or YouTube TV bundle may start to look more appealing, even with a pure DTC option. Plus, with cable, you can toggle between channels much more easily than with apps. That is also worth something to a lot of sports fans.
There will be folks who drop cable for ESPN DTC. But how many? I really think the total demise of cable TV may not happen even in a couple of years when ESPN does make the move.
Bottom line: ESPN+, ESPN’s add-on DTC service, already has 25 million subscribers. ESPN, the flagship network, has 74 million, which adds together to basically the 100 million peak that ESPN had in 2011. Disney/ESPN are getting people like me and, if you are reading this newsletter, maybe you, paying them twice — once for ESPN and again for ESPN+.
Let’s say, using my 37 million number of ESPN cable viewers, 10 million move off cable to DTC. Is that really going to be the demise of cable? Yes, it will continue to diminish the subscriber base. But demise? I don’t think so.
The next round of ESPN layoffs are expected to take place this week, according to sources. … Matt Ryan chose CBS over Fox Sports to start his analyst career, according to sources, taking the Greg Olsen path. Ryan hasn’t totally committed to not playing again, but, by going with CBS, Ryan will be able to see if he likes doing games or being in studio better. He will do both. (Fox was offering Ryan Sean Payton’s chair on its Sunday 11 a.m. pregame show.) CBS will also be able to evaluate Ryan in both venues. CBS’s “NFL Today” is probably going to look different after its upcoming Super Bowl. Most of the crew have contracts that expire some time following the big game. … TNT NHL studio analyst Paul Bissonnette brings an
energy and levity to the show, saying he is “horned up for hockey.” Big personality works; especially when it loves the game. … Apple TV+ has not released any subscriber numbers for its new MLS package, but I keep hearing that it is not going well. While currently offering a free trial month could mean a lot of things, it doesn’t feel like a positive. For example, if YouTube somehow offered some discounted promotion a quarter of the way through its inaugural NFL Sunday Ticket season, what would be the reaction? On Saturday, Apple put its Red Zone show on YouTube for free. The decision coincides with its “rivalry week,” which it could argue is a way to entice on-the-fence fans. But it feels like MLS is more irrelevant in the soccer conversation. It is the first year of a decade-long deal, but you wonder if an opt-out is used at some point. … Speaking at a MoffettNathanson event, Fox CEO Lachlan Murdoch said it is “highly unlikely” Fox bids on the NBA, whose TV deals are up following the 2024-25 season. ESPN, Warner Brothers Discovery Sports, Amazon, Apple and NBC are the main potential bidders. The NBA is expected to add at least one more package, going to, at minimum, three partners. Both ESPN and WBD remain the favorites to stay involved, while there may just be one package for the other three. There is a long way to go. … WBD Sports laid off 50 employees this week, as first reported by podcaster John Ourand. Pac-12 and ESPN
ESPN and the Pac-12 are having no substantive talks at this time, according to sources. ESPN passed on the Big Ten, Sunday Ticket, Premier League, Champions League and MLS, so the idea that it will be completely out on the Pac-12 is not in the least bit surprising. Things can always change, and maybe the Pac-12 can figure out a creative way to get ESPN involved, but right now that seems very unlikely.
Clicker Book Club
Papa Clicker, our book reviewer and my dad, Herb Marchand, says, Jeff Benedict’s new book, “LeBron,” takes readers on the ride from LeBron James’ life as a lonely little kid in Akron, Ohio to becoming one of the all-time greatest basketball players, a successful businessman, a charitable person and spokesman on issues, including politics. In many ways, he has changed the role of major athletes as his career has evolved. Papa Clicker gives Benedict’s book 4.5 out of 5 clickers.