When our new favorite medai–er, media–executive Bob AIger recently announced he was considering options to sell off pieces of Disney’s television businesses, it sent shock waves through the entertainment industry at large. Included among those possibilities was ESPN, which caused ever greater consternation among sports fans. After all, with leagues and conferences so heavily dependent on their ability to pay its players with media money, bringing in a new sheriff to run what was been a cash cow for them for decades could be a bit jarring. Ask anyone who’s been dealing with our other friend Yosemite Zas, who’s been anything but generous with Warner Brothers Discovery’s money since he took over. Heck, ask NBA commissioner Adam Silver, who hasn’t exactly seen TNT throwing buckets of money at his feet as the next round of rights for his games has been up for discussion for a while and, well, crickets.
But when this update was announced yesterday by numerous media news outlet reporters, including NEXT.TV’s Daniel Frankel, even someone who has been as jaundiced by Iger’s recent actions as moi had to stop and take pause:
The Walt Disney Co. and its ESPN unit have recently held high-level discussions with the NFL, NBA and Major League Baseball about bringing the leagues in as actual stakeholders as ESPN moves to a direct-to-consumer streaming model.
The news came late last week via an exclusive report from CNBC, which had just hosted Disney CEO Bob Iger on Squawk Box. The report was confirmed over the weekend by The New York Times and several other outlets.
As CNBC noted, selling minority stakes to the leagues might be a way to mitigate massive multibillion-dollar national rights licensing costs for ESPN. This would allow Disney to better compete with Amazon, Apple and Google, who are aggressively courting rights to live sports.
Disney’s national TV rights deal with the NBA is set to expire in June 2025. Given Disney will be migrating ESPN to a distribution model with significantly leaner margins than what was traditionally seen in linear, it might make sense to offer such a league partner an equity stake rather than come up with a raise on the current bill of $2.5 billion a season.
And honestly, upon further review, it would also greatly simplify these leagues’ roads to getting their product out there to their fans and, of course, their consumers. Not to mention allow them to take whatever they may have learned in years of attempting to compete with them.
Each of these leagues has run channels of their own that have mirrored ESPN’s look; in many cases, they have employed many of their former ion-air personalities. The NBA has indeed partnered with Turner Sports on their own channel and has shared back-room personnel and promotion for many years. They have competed for distribution on MVPDs, often sharing sports tiers’ neighborhoods that have used the suite of ESPN networks as their anchors. Look at DIREC TV, where its 200s tier featured the ESPN nets in the 206-209 range and the league channels between 212-216. There’s MLB at 213, NHL at 215 and NBA at 216. To a less sophisticated subscriber, they already likely believe that ESPN has a piece of the business already.
To the ever-growing streaming landscape, there is evem more potential upside, as STREAMABLE’s David Satin detailed yesterday:
If Disney did sell part of ESPN to major sports leagues, it would be a game-changing move in several ways. First, it would give the channel and leagues enormous leverage over other broadcasters when it came time to renegotiate broadcast rights deals. The NFL could demand whatever price it wanted from CBS, Fox, and NBC for its games, and if the networks don’t pay, the league can simply stash its games on ESPN outlets instead.
Selling part of ESPN to major sports leagues would also allow those leagues to increase their presence on streaming once ESPN does begin offering a standalone streaming-only version of its channels. The leagues would still have the option of shopping their games around to other streaming services, but if they don’t see the kind of offers they want, they’ll have an in-house option ready to go.
Here’s WatchESPN’s landing page from yesterday. Note that the MLB.tv tile for the Giants-Tigers game is included amidst all of the other content that is exclusive to the ESPN family, including those crucial Little League softball regional games. MLB paid ESPN for that right to help navigate possible viewers to its content on RSNs that they have become increasingly disenchanted with and, indeed, have now clawed back rights from two teams, the San Diego Padres and, as of last week, the Arizona Diamondbacks with nary a disruption in availability, audience or appetite, save for the losing streaks those teams have recently endured. Leveling that playing field to allow leagues to get the same priority position among tiles that public demand would otherwise reflect will only increase navigatbaility and appeal. And as Satin continued, that appeal is already pretty strong:
Audiences would likely follow ESPN to streaming, even older viewers who have traditionally been resistant to watching sports on streaming in general. A survey from September found that 78% of cable subscribers rated ESPN as a “must-have” channel, once again confirming the stickiness of its brand and the likelihood that consumers would engage with a streaming-only version of the channel at a high level.
And from the leagues’ standpoints, eliminating the need for them to try and compete, and indeed join forces, will eventually force other content providers’ hands. Which, to the customer, means less need for multiple subscriptions and passwords, and GUI-like navigatability of all significant sports content, which is a goal that currently evades the warring entertainment-driven streamers that jockey for attention and relevance.
I find it hard to find any downside other than the reality check that there will likely be fewer jobs for talent. But it’s not as if any particular one has been driving viewership. Really, is even Scott Van Pelt significant enough relevant to live games for that to be anything more than collateral damage? (And, yes, I AM a fan of his; after all, these days, we share the same barber).
So if that was the gist of the idea that was floated, then at least from a sports perspective, then the real Bob Iger can take a bow. Incidentally, that’s ESPN honcho Jimmy Pitaro at the top of this page, who many consider to be the one who pushed that idea up the food chain at Disney. So he at least gets a nod.
In which case, we’ll leave it to the actors and writers to deal with his mutant form. And certainly hope the leagues get the OG version rather than this one.
Courage…