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What Is In ESPN’s Future?

Jason Barrett

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If you imagine the world of traditional television as a fortress on a mountaintop, one whose walls are crumbling due to heavy fire from players like Netflix NFLX 4.47% and HBO and Amazon Prime, then the seemingly impregnable tower at the center of the fortress would have to be ESPN. Why? Because the Disney-owned channel has the one thing that has managed to maintain its value while everything else gets completely obliterated: Namely, exclusive rights to a world of sports content. But is that enough—and if so, for how long?

You can tell that this kind of concern is weighing on the minds of Disney DIS -9.72% investors, because the stock dropped by close to 10% following the release of the company’s quarterly financial report, despite the fact that the overall numbers for the entertainment conglomerate were pretty good. Almost every questionon the earnings conference call was about ESPN and the ongoing loss of both subscribers and profits.

In a nutshell, the big fear is that the network’s lucrative stranglehold on sports is disintegrating, pulled apart by a combination of cord cutting, streaming via digital services and competitive pressures from all sides. There have already been rumors of cost-cutting and the channel has shed a number of high-profile (and expensive) personalities such as Grantland founder Bill Simmons, now at HBO.

Disney CEO Bob Iger spent much of his time on the earnings call talking about ESPN, and about how he doesn’t see much impact from cord cutting for at least the next five years or so—an estimate that at least some analysts think is absurdly optimistic. Iger also reiterated comments he has made in the past to the effect that if ESPN wanted to, it could come up with its own over-the-top service similar to HBO Now, and that a substantial number of subscribers would likely pay for it.

The Disney CEO also noted that 83% of all multichannel households turned to ESPN in the first quarter of this year, and that 96% of all sports programming is watched live, which he called “particularly valuable in today’s rapidly changing advertising marketplace.” And here are some media-industry analysts who agree with Iger that the existing “moat” around ESPN’s content is still pretty wide.

Ben Thompson, an analyst who writes the subscription newsletter Stratechery, said in a recent update that “ESPN is far better positioned for a world where they must go over the top to consumers than people give them credit for.” Even if ESPN was to charge more than $30 a month per subscriber—as a recent analysis said they would, in order to maintain their existing revenue — Thompson called that “a very realistic target.”

Not everyone is quite as sanguine, however. Analyst Eric Jackson said the channel might be able to engineer a transition to an over-the-top digital version of its existing service, but there are still some large question marks associated with that transition. As he put it:

“What if OTT and any new digital format is one-tenth as profitable as the Euro-socialist cable bundle? If you trade analog dollars for digital dimes, how do you wave your hands and chance basic economics?”

One of the things that makes ESPN very different from other streaming success stories such as HBO and Netflix is that the sports broadcaster’s content has an extremely short half-life. Netflix may not mind paying hundreds of millions of dollars for a TV show because it knows it can rebroadcast and license that content forever, but ESPN’s library consists of things that only have value for a few hours.

On the one hand, this short life-span is the channel’s biggest strength: When a major sporting event is taking place, people want to see it right away, and they are willing to pay handsomely for that ability. But if competitive pressure continues to increase, that life-span could become a serious weakness.

 

One potential source of competition for ESPN, ironically, is the very sports leagues and franchises that it relies on for its livelihood. Major League Baseball’s internal streaming and mobile technology operation, known as BAM, has quietly become a powerhouse in that part of the market, and now it has signed a deal to do all of the broadcasting for the NHL as well. Thompson argues that most leagues will opt for the broader reach of ESPN rather than go direct, but it’s unclear how many will feel that way, or for how long.

ESPN has signed expensive long-term contracts with most of the leagues it deals with, but if more and more of them start to pursue their own over-the-top deals via providers like BAM or even Yahoo and other outlets, then ESPN’s iron grip on live sports could continue to weaken.

If you’re an investor in Disney because of its ESPN stake, these are some of the questions you probably want to ask yourself: How much value do those existing contracts have as the TV market continues to implode? What could potential competitors, including the leagues themselves, do to ESPN’s margins? And if it decides to (or is compelled to) offer its own over-the-top service, how many people would likely subscribe to it directly, and how much would they be willing to pay?

Credit to Fortune who originally published this article

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Report: NFL to Put Christmas Day Doubleheader Up For Bids

Bidding is expected to start at $50 million among the current NFL media partners but some think the games could sell for $75 million to $100 million apiece.

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The NFL will reportedly put its Christmas Day games up for auction, allowing its current media partners to bid for the games. Now, it’s up to CBS, FOX, ESPN, NBC, and Prime Video to pay up for rights to one of these two marquee games.

According to Front Office Sports Michael McCarthy, preference will be given to linear networks, so Prime Video and Peacock may sit this one out. Bidding is expected to start at $50 million but McCarthy and his sources expect that number to rise. John Kosner, the former ESPN executive, thinks the new Christmas Day games could sell for $75 million to $100 million apiece.

The NFL announced a Wednesday Christmas Day doubleheader during its annual league meetings. The league originally said it wouldn’t force games on Christmas Day if the holiday fell on an odd day of the week, though as the NFL continues to put games on days outside of Sundays, Mondays, Thursdays, and sometimes Saturdays, we’re running out of days that don’t feature NFL football.

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Colorado Rockies & DirecTV Reach Agreement to Carry Games on TV

“Colorado sports fans have made DIRECTV the top destination for their favorite local teams. We will continue to work with MLB…so fans can get their games.”

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Breathe easy, Rockies fans — you will be able to watch your club on linear TV this year. At the buzzer, DirecTV and the Colorado Rockies agreed on terms to distribute the team’s games throughout its local service.

Starting today, DirecTV Choice subscribers across Colorado, Utah, Wyoming, Southern Idaho, Western Nebraska, and Northern New Mexico can now watch the Rockies on a special channel simply titled, “ROCKIES.” The games will be available on DirecTV and DirecTV STREAM via channel 683.

“Colorado sports fans have made DIRECTV the top destination to get all their favorite local teams,” said Rob Thun, chief content officer of DIRECTV. “We will continue to work with MLB, the NBA, NHL, and other top leagues and their local franchises so the most avid fans can get the games they want while other customers have more choice over the content they want to pay to have in their homes.”

Reports just days ago out of Colorado said there were “no guarantees” the Rockies would not find a TV home in time for Opening Day following the sunsetting of AT&T SportsNet. The only other way to watch the team is to use its direct-to-consumer Rockies.tv streaming service, which fans say is too pricey for a team that lost 103 games last season. Luckily, the team was able to secure a TV home for 2024, though the future is still uncertain.

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Erin Andrews Reveals Infertility Journey in Emotional ‘Today Show’ Interview

FOX reporter Erin Andrews sat down with ‘The Today Show’s’ Kristen Welker to discuss her journey, how Welker’s own journey inspired her, and more.

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FOX reporter Erin Andrews shared her story of infertility and surrogacy with NBC’s Today Show. Last summer, Andrews and her husband welcomed a baby boy via surrogate after trying for a decade to get pregnant via IVF, during which she was diagnosed with cervical cancer in 2016. Today, she sat down with Kristen Welker to discuss her journey, how Welker’s own journey inspired her, and more.

Andrews says Welker’s announcement on the Today Show made her think a baby could be possible. “I remember Kristin Welker’s announcement on your show,” Andrews said last year, “and I actually watched that the morning Mac was born, because that just hit me.”

When they finally sat down, Welker asked Andrews why her journey resonated with the sports reporter so much:

“Because I see myself in you. Kristen, the video of you moderating debates after you’re waiting on bad news or maybe you just received it, that’s me. I can tell you every stand-up I’ve done at a football game where I’ve gotten the news that it didn’t work. I’d be talking about Tom Brady going for this record and my record is that I still was failing…I would have chest pains every time I was waiting for the call if it worked, and I knew it wouldn’t work.

Erin Andrews on ‘Today’

Andrews knew surrogacy was the only path to having a child. Although her family’s first attempt failed, her second attempt was a success, and she got to hear her child’s heartbeat for the very first time. The pair discuss the complex emotions that come with surrogacy, saying that bonds with their child could be affected because they didn’t carry their child. However, Welker assured Andrews that those feelings go away once you can talk to your child.

Once her son was born in June, who Andrews called, “a miracle,” she then talks about her child glowingly, talking about how he is just like mom — vocal. “He’s all me,” she says.

Andrews supports Baby Quest, a non-profit that grants money to families in need of IVF or surrogacy to have a baby but don’t have the funds to pursue these expensive treatments. Both Andrews and Welker acknowledged how difficult and unattainable their journies are for some families — and Andrews even used the NFL’s “My Cleats, My Cause” initiative to raise awareness for her cause.

“People don’t need to feel embarrassed that they have a surrogate or are looking for other help,” Andrews said.

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