Is ESPN In Trouble (cord-cutter)

[Cheeks]

No one said to sell it 10 years ago.

I'm just glad I bought it 20 years ago when I worked for them for two years.   

[Heisenberg]

I'm just glad I bought it 20 years ago when I worked for them for two years.   

... and you should have sold it 4 years ago.

[Heisenberg]

ESPN peaked at 110 million subscribers in 2011.  Now under 85 million.  25 million gone!

The last seven months have been horrific.

https://twitter.com/SportsTVRatings/status/1112736050093408256
@SportsTVRatings
hadn't seen cable coverage estimates (how many homes each network is in) from Nielsen since August. Here's the April 2019 v August 2018 for the cable sports nets I saw:

[MU82]

So what is anybody supposed to do with this info, Smuggles?

If DIS investor?

If not DIS investor?

Or is it just info you think is interesting (and there's nothing wrong with that)?

[Cheeks]

ESPN peaked at 110 million subscribers in 2011.  Now under 85 million.  25 million gone!

The last seven months have been horrific.

https://twitter.com/SportsTVRatings/status/1112736050093408256
@SportsTVRatings
hadn't seen cable coverage estimates (how many homes each network is in) from Nielsen since August. Here's the April 2019 v August 2018 for the cable sports nets I saw:

Which is exactly why they should be incentivized to keep the old bundle together.  Furthermore, your little chart doesn't include their additions in the OTT space...so the net loss you are talking about is not at the same level your graphic indicates.

[MU82]

Endgame might end up being the highest grossing movie ever, and Disney can just keep cranking out Marvel movie after Marvel movie and all of them will be huge at the box office. In addition to Star Wars, Pixar films, etc. In addition to theme parks and cruise ships and merchandise. Oh, and TV too.

DIS hit all-time this morning.

[Heisenberg]

So what is anybody supposed to do with this info, Smuggles?

If DIS investor?

If not DIS investor?

Or is it just info you think is interesting (and there's nothing wrong with that)?

This thread is about cord-cutting (see the name).  If is not a thread about being long DIS. 

Trying to get back to the original topic.

[Dr. Blackheart]

This thread is about cord-cutting (see the name).  If is not a thread about being long DIS. 

Trying to get back to the original topic.

Cheek's point is that the discussion has shifted from ESPN set top household penetration to the horizontally integrated media properties that Disney is gobbling up including the Fox properties.  So, while ESPN is in less homes, more people are watching Disney media properties. 

So, cost synergize these properties across their verticals and increase their media impressions with acquisitions (and set top fees for each channel and on-demand subscription fees).

[MU82]

This thread is about cord-cutting (see the name).  If is not a thread about being long DIS. 

Trying to get back to the original topic.

1. Yes, far be it from any Scooper, including you, to discuss something other than the exact title of a thread, even a related one.

2. As Dr. B said, it's all intertwined. ESPN is still important to DIS but less so than it was just a couple years ago. DIS not only will survive but thrive in the cord-cutting era.

[MU82]

In kind-of-related, not-surprising news ...

https://www.sportsbusinessdaily.com/SB-Blogs/Breaking-News/2019/04/ESPN-Mag.aspx

[Heisenberg]

Cheek's point is that the discussion has shifted from ESPN set top household penetration to the horizontally integrated media properties that Disney is gobbling up including the Fox properties.  So, while ESPN is in less homes, more people are watching Disney media properties. 

So, cost synergize these properties across their verticals and increase their media impressions with acquisitions (and set top fees for each channel and on-demand subscription fees).

But they have to compete with Netflix, Hulu, Prime, Facebook, Google among others.

Too much competition. 

[Heisenberg]

The Sports TV Bubble Shows Signs of Weakness
https://www.bloomberg.com/opinion/articles/2019-05-06/sinclair-disney-rsn-sale-sports-tv-bubble-shows-weakness?srnd=opinion
Sinclair's deal to buy the former Fox regional sports networks values them at less than expected.

Fast forward to June 2018 when Murdoch agreed to sell most of his Fox television and movie assets to the Walt Disney Co. for $71 billion. As a condition of government approval, Disney promised to sell off Fox's 22 regional sports networks, or RSNs. Analysts predicted that they would fetch between $20 billion and $22 billion, according to Bloomberg News.

Instead, Sinclair Broadcast Group Inc. agreed last week to buy them for $10.6 billion. True, the YES Network that broadcasts the New York Yankees — by far the most valuable of the RSNs — was not part of the deal, as the Yankees bought it back for $3.47 billion. Even so, that means that the Fox networks garnered between $6 billion and $8 billion less than Disney had hoped.

If Murdoch's original deal with the NFL stands as an important early marker in the explosion of sports rights in the U.S. — and it does — I'm wondering if we'll someday look back on the sale of Fox's RSNs as the moment when the sports rights bubble began to burst. I think it might.

My thesis is based on two interrelated factors. The first is that cord-cutting is inevitably going to impinge on the ability of the TV networks to pay ever-higher prices for professional and big-time college sports. I don't deny that sports, especially football, has become more important than ever to the legacy networks. There are many people who continue to subscribe to cable TV solely because they would otherwise miss MLB or NBA playoff games or the NCAA's March Madness tournament. Without sports, they would likely cancel their cable subscription.

But ESPN, Disney's all-sports network, has lost about 15 million subscribers over the past half-dozen years. That represents more than $1.2 billion in lost revenue. CBS Corp.'s revenue has been mostly flat since 2012. Disney's chief executive Robert Iger has warned that as the company pushes aggressively into streaming services, its profits will take a short-term hit. According to Richard Greenfield, an analyst with BTIG, 1.1 million viewers cut the cord in the first quarter of 2019, the biggest quarterly decline ever. You have to wonder how the legacy networks will be able to keep paying ever higher rights fees — as they have for decades — if they keep losing viewers.

Also has this

The modern economics of sports has been built on the notion that rights packages can only go in one direction: up. That's why Steve Ballmer was willing to pay $2 billion to buy the Los Angeles Clippers, and why the New York Yankees are worth $4 billion, according to Forbes. It's also why the Philadelphia Phillies were able to sign Bryce Harper to a 13-year, $330 million contract, while even a middling professional basketball player like the Indiana Pacers' Wesley Matthews makes over $16 million a year.

[Heisenberg]

Streaming Could Kill Cable In 4-5 Years: Porter Bibb
https://www.bloomberg.com/news/audio/2019-05-08/streaming-could-kill-cable-in-4-5-years-porter-bibb-podcast
Porter Bibb, Managing Partner for MediaTech Capital Partners, on Disney and an overview of the digital media sector, which is in sustained transition.

[Cheeks]

Streaming Could Kill Cable In 4-5 Years: Porter Bibb
https://www.bloomberg.com/news/audio/2019-05-08/streaming-could-kill-cable-in-4-5-years-porter-bibb-podcast
Porter Bibb, Managing Partner for MediaTech Capital Partners, on Disney and an overview of the digital media sector, which is in sustained transition.

Most cable companies are or have launched their own streaming services....so shifting from one business unit to another.

[Cheeks]

The Sports TV Bubble Shows Signs of Weakness
https://www.bloomberg.com/opinion/articles/2019-05-06/sinclair-disney-rsn-sale-sports-tv-bubble-shows-weakness?srnd=opinion
Sinclair's deal to buy the former Fox regional sports networks values them at less than expected.

Fast forward to June 2018 when Murdoch agreed to sell most of his Fox television and movie assets to the Walt Disney Co. for $71 billion. As a condition of government approval, Disney promised to sell off Fox's 22 regional sports networks, or RSNs. Analysts predicted that they would fetch between $20 billion and $22 billion, according to Bloomberg News.

Instead, Sinclair Broadcast Group Inc. agreed last week to buy them for $10.6 billion. True, the YES Network that broadcasts the New York Yankees — by far the most valuable of the RSNs — was not part of the deal, as the Yankees bought it back for $3.47 billion. Even so, that means that the Fox networks garnered between $6 billion and $8 billion less than Disney had hoped.

If Murdoch's original deal with the NFL stands as an important early marker in the explosion of sports rights in the U.S. — and it does — I'm wondering if we'll someday look back on the sale of Fox's RSNs as the moment when the sports rights bubble began to burst. I think it might.

My thesis is based on two interrelated factors. The first is that cord-cutting is inevitably going to impinge on the ability of the TV networks to pay ever-higher prices for professional and big-time college sports. I don't deny that sports, especially football, has become more important than ever to the legacy networks. There are many people who continue to subscribe to cable TV solely because they would otherwise miss MLB or NBA playoff games or the NCAA's March Madness tournament. Without sports, they would likely cancel their cable subscription.

But ESPN, Disney's all-sports network, has lost about 15 million subscribers over the past half-dozen years. That represents more than $1.2 billion in lost revenue. CBS Corp.'s revenue has been mostly flat since 2012. Disney's chief executive Robert Iger has warned that as the company pushes aggressively into streaming services, its profits will take a short-term hit. According to Richard Greenfield, an analyst with BTIG, 1.1 million viewers cut the cord in the first quarter of 2019, the biggest quarterly decline ever. You have to wonder how the legacy networks will be able to keep paying ever higher rights fees — as they have for decades — if they keep losing viewers.

Also has this

The modern economics of sports has been built on the notion that rights packages can only go in one direction: up. That's why Steve Ballmer was willing to pay $2 billion to buy the Los Angeles Clippers, and why the New York Yankees are worth $4 billion, according to Forbes. It's also why the Philadelphia Phillies were able to sign Bryce Harper to a 13-year, $330 million contract, while even a middling professional basketball player like the Indiana Pacers' Wesley Matthews makes over $16 million a year.

This I agree with and have been saying it for many years, the question is whether the FANG folks will keep the craziness alive.

[Heisenberg]

Most cable companies are or have launched their own streaming services....so shifting from one business unit to another.

Actually, they all are. But they make far less on a streaming subscriber than a cable subscriber.  So the move to streaming means less revenues.  And Porter Bibb noted that Disney is getting in late and has to really pay up for content (versus a few years ago).

[Heisenberg]

This I agree with and have been saying it for many years, the question is whether the FANG folks will keep the craziness alive.

Back to Porter Bibb ... the only reason cable has not already died is live sports.  So if the FAANGS (facebook, apple, amazon, netflix and/or Google) pay up for sports rights, that is the end of traditional cable. 

They all become internet providers.

[MU82]

DIS had another outstanding earnings report.

https://seekingalpha.com/news/3461140-disney-plus-1_6-percent-amid-gains-parks-fox-direct-consumer

"Media Networks" segment (of which ESPN is a part) made $5.53B in revenue during fiscal Q2, about equal to Q2 of last year.

Most other segments were well up.

Good, money-making company.

[Heisenberg]

DIS had another outstanding earnings report.

https://seekingalpha.com/news/3461140-disney-plus-1_6-percent-amid-gains-parks-fox-direct-consumer

"Media Networks" segment (of which ESPN is a part) made $5.53B in revenue during fiscal Q2, about equal to Q2 of last year.

Most other segments were well up.

Good, money-making company.

So you think Nocera (thread above) is wrong in his assessment of ESPN?

https://www.bloomberg.com/opinion/articles/2019-05-06/sinclair-disney-rsn-sale-sports-tv-bubble-shows-weakness?srnd=opinion

[Jockey]

Back to Porter Bibb ... the only reason cable has not already died is live sports.  So if the FAANGS (facebook, apple, amazon, netflix and/or Google) pay up for sports rights, that is the end of traditional cable. 

They all become internet providers.

Nonsense. There are already a myriad of non-cable options for live sports that have been available for years.

[Cheeks]

So you think Nocera (thread above) is wrong in his assessment of ESPN?

https://www.bloomberg.com/opinion/articles/2019-05-06/sinclair-disney-rsn-sale-sports-tv-bubble-shows-weakness?srnd=opinion

RSNs are a very different animal. I deal with them every day.  Huge fees, low ratings.  I wouldn't judge the entire landscape on RSNs.

[MU82]

So you think Nocera (thread above) is wrong in his assessment of ESPN?

https://www.bloomberg.com/opinion/articles/2019-05-06/sinclair-disney-rsn-sale-sports-tv-bubble-shows-weakness?srnd=opinion

I think that over time ESPN has to make some changes to keep making money. It already has begun to do so. As chicos said, RSNs are different from ESPN.

All that matters to me is how it relates to my DIS stock. I'm glad to be a shareholder of this diversified media and entertainment conglomerate.

[MU82]

The ending of the Sixers-Raptors game shows why these networks are willing to pay so much for live sports.

It is the true "reality TV" -- pretty much the only thing a network can show that isn't contrived or scripted.

If a Hollywood screenwriter had written that ending -- the star practically falling out of bounds on a high-arching 21-footer that bounced on the rim 4 times before going through the basket, with time seemingly standing still and the crowd eerily quiet -- that screenwriter would be mocked.

Sports is the greatest theater out there.

[SERocks]

The ending of the Sixers-Raptors game shows why these networks are willing to pay so much for live sports.

It is the true "reality TV" -- pretty much the only thing a network can show that isn't contrived or scripted.

If a Hollywood screenwriter had written that ending -- the star practically falling out of bounds on a high-arching 21-footer that bounced on the rim 4 times before going through the basket, with time seemingly standing still and the crowd eerily quiet -- that screenwriter would be mocked.

Sports is the greatest theater out there.

All happening while the player is squatting down in the corner waiting to see if it goes in.....unbelievable. 

[Jockey]

If a Hollywood screenwriter had written that ending -- the star practically falling out of bounds on a high-arching 21-footer that bounced on the rim 4 times before going through the basket, with time seemingly standing still and the crowd eerily quiet -- that screenwriter would be mocked.

Sports is the greatest theater out there.

It would be like "The Natural" - worst sports movie ever made.