CNBC investment strategist Jim Cramer spoke with TheStreet.com about Disney’s restructuring to focus on its streaming businesses this week. He said that the decision does not indicate the company wants to stay in the sports media business.
“I think it’s really about getting rid of ESPN,” Cramer said. “There is a belief we’re saturated in sports. That ESPN is no longer integral.”
ESPN was hit particularly hard by the Covid-19 pandemic. Ratings for the network hit a 41-year-low while the sports world hit the pause button earlier this year. Reports of a coming round of major layoffs loom large over the company.
All this news comes on top of the cord-cutting problems ESPN and other networks have dealt with for the better part of a decade now. Cramer says that with revenues down and the network still on the hook for some huge broadcast rights fees, ESPN may cost too much to fit into Disney’s new model.
“ESPN used to be this unbelievable thing, and now it’s just a really expensive thing they are having trouble monetizing. ESPN is no longer the precious place that it once was.”
ESPN+ was one of the digital products that Disney CEO Bob Chapek touted as outperforming all projections the company had for it. That doesn’t necessarily prove Cramer’s belief is wrong, but perhaps Disney does have a vision of an all-digital future for ESPN. In order for an all-digital future to look at all familiar to ESPN fans, the network would need its play-by-play partners to buy in in a BIG way.
If Cramer is right though and Disney wants out of the sports media business entirely, it will be very intriguing to see how the company is sold. There would be plenty of interest, but would Disney be better off selling ESPN as a single business or selling the broadcast networks, the radio network, and the digital properties individually?
