Has The Sports Bubble Popped?

[Tugg Speedman]

I went two weeks ago to Anaheim Stadium for the motocross...put on by same production company.  Passed on tonight. 

Thing is, costs for this kind of stuff is cheap. It's filler.  That being said, I don't think the bubble is over by any stretch, but FS1 has some issues right now....not on quality, in other areas.   My former boss is the president of FS1.  Very smart guy.  He has a tough gig right now.

I'm defining the sports bubble as people that do not watch sports will stop paying for it.  Cord cutting, skinny bundles and the end of "linear TV." is going to cause this to happen. 

ESPN revealing that its subscribers went from 99 million to 92 million blow up Disney's stock in August from which is still has not recovered.  Wall Street thinks this announcement marks the popping of the bubble.

Note what I'm not saying is people are growing uninterested in sports.  What is happening is the market for buying sports programming (ie., paying for ESPN or not) is getting more efficient and ESPN and other sports programmers can no longer rely on getting a significant part of the revenues from people that do not use (watch) their product (subscribe to cable which has ESPN and ESPN2, which they have no interest in watching, and pay $8/month for them).

Is this your definition of the sports bubble?  And why don't you think it's popping?

 

[ChicosBailBonds]

I'm defining the sports bubble as people that do not watch sports will stop paying for it.  Cord cutting, skinny bundles and the end of "linear TV." is going to cause this to happen. 

ESPN revealing that its subscribers went from 99 million to 92 million blow up Disney's stock in August from which is still has not recovered.  Wall Street thinks this announcement marks the popping of the bubble.

Note what I'm not saying is people are growing uninterested in sports.  What is happening is the market for buying sports programming (ie., paying for ESPN or not) is getting more efficient and ESPN and other sports programmers can no longer rely on getting a significant part of the revenues from people that do not use (watch) their product (subscribe to cable which has ESPN and ESPN2, which they have no interest in watching, and pay $8/month for them).

Is this your definition of the sports bubble?  And why don't you think it's popping?

As stated earlier, the same analysts also predict the number of total linear pay tv subscribers will be above 90 million through the 2020's.  Now, population grows, so cord cutting alternatives will also grow, thus market share will change, but linear tv will dominate for a long time.  I work in both worlds, I see the data every day.

I thought you were implying that payment for sports rights was going to reverse.  At some point, I actually think it will, but again believe this is way down the road.  You will see it on fringe properties, but that is nothing new.  The bigger properties, will continue to get their increases. 

And yes, as people pull away from sports there will be cord cutting or downsizing to skinny packages.  That is why when I was at DIRECTV we created the Select package and ESPN is pissed at this day about that, because of how many people moved down to Select (no ESPNs) meant lower costs.   That being said, ESPN is making up the difference in other skinny packages like Sling from DISH.   

[MU82]

90% of all restaurants fail after a year.  So when people ask how the restaurant down the block is doing, if it has been in business for more than a year, it's doing good!

Likewise, 90% of hedge fund struggle.  Dougie is a hedge fund manager that positions exactly the way he writes.  After years and years he still in business, so he's doing well.

Fair enough. Very reasonable.

Hedge fund managers, like the rest of us, make plenty of mistakes. The good ones who can stay in business for years have proven something, as have the good investors who have beaten "the market" for years. Despite proclamations from the financial industry and the media, there are many such creatures.

[Tugg Speedman]

Fair enough. Very reasonable.

Hedge fund managers, like the rest of us, make plenty of mistakes. The good ones who can stay in business for years have proven something, as have the good investors who have beaten "the market" for years. Despite proclamations from the financial industry and the media, there are many such creatures.

To complete the thought, a hedge fund manager like Dougie can have dozens and dozens of ideas a year.  Many of them on the same stock (buy, then sell, then buy again).  So it is analogous to the .300 hitter or a 80% FT shooter.  If we are focusing on one specific idea (or at-bat, or FT) they can miss on anyone and still be good.

That said, I think Dougie has it right on Disney.

[bradley center bat]

Numbers go high and low all the time.
NBA and the NCAA TOURNAMENT saw record rating last season.

KC and Houston in the MLB playoffs had a record rating on FS1 and Michigan at Utah had a record rating on FS1. UFC is strong on FS1.

The CFP in year 1 had record rating on ESPN.

[Tugg Speedman]

As stated earlier, the same analysts also predict the number of total linear pay tv subscribers will be above 90 million through the 2020's.  Now, population grows, so cord cutting alternatives will also grow, thus market share will change, but linear tv will dominate for a long time.  I work in both worlds, I see the data every day.

I thought you were implying that payment for sports rights was going to reverse.  At some point, I actually think it will, but again believe this is way down the road.  You will see it on fringe properties, but that is nothing new.  The bigger properties, will continue to get their increases. 

And yes, as people pull away from sports there will be cord cutting or downsizing to skinny packages.  That is why when I was at DIRECTV we created the Select package and ESPN is pissed at this day about that, because of how many people moved down to Select (no ESPNs) meant lower costs.   That being said, ESPN is making up the difference in other skinny packages like Sling from DISH.   

Seems you're making a good bearish case here.

ESPN had 99 million subscribers.  It had saturated the market.  Their was virtually no one left to sign up, everyone has it now.  Now that we have cord cutters, skinny bundles and steaming.  These are ways for ESPN to manage their decline, not increase their revenues.

[MU82]

To complete the thought, a hedge fund manager like Dougie can have dozens and dozens of ideas a year.  Many of them on the same stock (buy, then sell, then buy again).  So it is analogous to the .300 hitter or a 80% FT shooter.  If we are focusing on one specific idea (or at-bat, or FT) they can miss on anyone and still be good.

That said, I think Dougie has it right on Disney.

I appreciate your perspective, and I admit it is one of the many things that has given me pause re DIS. I haven't bought yet, and I might never. I will easily reach my goals without taking major risks, so DIS might not be worth it for me.

And I happen to agree with your general point of your comment here. An investor need not be perfect to be successful.

[Benny B]

And I happen to agree with your general point of your comment here. An investor need not be perfect to be successful.

Yeah, but it sure helps. 

[ChicosBailBonds]

Seems you're making a good bearish case here.

ESPN had 99 million subscribers.  It had saturated the market.  Their was virtually no one left to sign up, everyone has it now.  Now that we have cord cutters, skinny bundles and steaming.  These are ways for ESPN to manage their decline, not increase their revenues.

That's through traditional Pay TV avenues, they'll make headway in skinny bundle OTT which is counted differently.  They get the same rate from Sling (DISH) as they do Dish, Cox, Charter, etc, but the platform is different.