The Walt Disney Company did not meet financial analysts’ expectations when the company released its financial report earlier this week, and ESPN is a problem.
Because of cord cutters, ESPN has lost subscribers and advertising with the cord cutters’ departure. ESPN always lived on the notion “no one will ever walk away from us,” and that thought entered into the long-term deals Disney did with sports partners. But the company found a scapegoat, or make that two scapegoats, who are the cause of the declining revenue.
Disney’s old partners, the National Football League and the National Basketball Association. The company did some very public finger pointing at the culprits that brought down ESPN’s bottom line. A Disney statement left no doubt as to what company executives and negotiators were thinking.
“The decrease at ESPN was due to higher programming costs and lower advertising revenue, partially offset by affiliate revenue growth,” the statement read. “The programming cost increase was driven by contractual rate increases for NBA and NFL programming.”
Disney has no one to blame but executives and negotiators who approved multibillion dollar deals with the National Football League and the National Basketball Association. In 2011, Disney’s ESPN unit paid about $15 billion to get the rights to Monday Night Football through 2021. The NFL was as popular as ever and ESPN had subscribers and could up subscriber fees. That has all stopped. No one forced Disney to sign a long-term multibillion dollar contract with the NFL. Disney is also sending the NBA nearly $1.5 billion a year through 2025.
Again, no one forced Disney to do the NBA contract. Someone thought it was important for ESPN as a worldwide sports leader to have NBA games. Apparently, that’s not necessarily the case in February 2017 and Disney is stuck with two bad sports contracts with subscribers leaving in droves.
By Evan Weiner For The Politics Of Sports Business
This article was republished with permission from the original publisher, Evan Weiner.