According to Nielsen, ESPN has lost 7.2 million subscribers over the past three years. That news is causing concern throughout the industry and leading to a decline in value on Wall Street.
The Disney company released their quarterly earnings on Tuesday and announced that “Star Wars: The Force Awakens” helped the company’s earnings soar 32 percent, raking in $2.9 billion. However, its television profits dropped 6 percent due to the increasing costs of sports-programming rights. The combination of profit and decline marked the second time in the past four Disney quarters such a backwards spreadsheet has been recorded in the TV segment. As a result, Disney’s shares fell 3 percent to $89.48 during after-hours trading. It was the company’s lowest level in over a year.
In the coming years, sports rights will cost a combined $130 billion between all major media companies, and leading the charge in the cost department is ESPN and Disney who account for an estimated 29 percent of long-term sports-broadcasting rights, ranging from the NBA playoffs to “Monday Night Football.” If the current TV market declines faster than the current 1 percent annual rate, Disney’s overall profit for the next four years could be cut in half.
Disney CEO Bob Iger though remains a believer that sports programming will continue to be an attractive commodity to consumers. “This notion that either the expanded basic bundle is experiencing its demise, or that ESPN is cratering in any way from a sub perspective, is just ridiculous,” Iger said. “Sports is too popular,”.
Last month, ESPN’s subscriber base sat at 91.4 million. The latest data indicates that number is less than the 94.5 million subscriber base the network carried in January 2015. Additionally, about 78 percent of ESPN’s $9.5 billion in net operating revenue excluding ad commissions came directly from subscriber fees last year.
Credit to Examiner who originally provided this information
