As more and more people cut the cord, the question for ESPN and parent company Disney becomes how does the network evolve and does its financial positioning set them up to remain primary players in live sports rights.
ESPN and Warner Bros. Discovery are going to be jockeying to keep their deals with the NBA when the league starts working on a new contract in the next two years. One CNBC analyst recently said as the asking price for live sports rights continues to skyrocket, Disney will eventually won’t be able to compete due to the deep pockets at tech giants like Amazon, Apple and Alphabet, which owns Google and YouTube.
“The balance sheet of Apple, Google, YouTube is quite different than that of Disney on the one hand,” Bruin Capital founder and CEO George Pyne said to host Brian Sullivan on Last Call. “On the other hand what’s hurting ESPN these days is the subscribers. The cord-cutting that’s gone on is meaningful. And so ESPN was so valuable, sports was so valuable, they charged a premium. You want ESPN, you got to take ESPN2, you have to take these other two or three channels you have to pay this price. Well as the cord-cutting goes on that pricing power isn’t there the way it used to be.”
Pyne noted exponential growth in the tech sector in recent years and how that’s helped make the juggernaut companies so appealing to leagues to partner with.
“It’s only logical that sports will be a destination for them more and more in the future,” he said.
“Like literally for NBC or Disney, 5 billion bucks is a lot of money,” Sullivan responded. “Apple, it’s like you or I dropping a five on the sidewalk.”
