If you’re a sports fan, even just a casual one, you’ve likely heard the narrative that ESPN is failing. Their viewership is in decline, their biggest radio show “Mike and Mike” just lost one of the Mikes after he decided he wanted to pursue other things within the company, Monday Night Football ratings are still down are among some of the evidence of this narrative.
People place the blame to statistically measure things like ESPN’s supposed liberal bias or the fact that they’re just not entertaining compared to their competition. The biggest quantifiable reason for their declining numbers is cord-cutting.
It’s the practice of people choosing which channels to pay for rather than pay a larger cable bill for a bundle of channels. In the past, if someone didn’t like sports but loved the E! channel, they would have to pay for ESPN as part of the bundle. With technology today, they are now able to pay for something like E! and skip paying ESPN entirely. That’s problematic for ESPN as most of their revenue came from those bundled packages.
Let’s pause for a moment and also acknowledge that while an objective decline in ratings and profits for ESPN is happening, saying they are failing is a bit of a stretch. According to Statista, a statistics gathering site, ESPN’s brand value sits at just under $16 billion. Admittedly, it is down from a $17 billion in 2015 but still, what $16 billion company would you call a failure?
So while failing is a poor choice of words, there is cause for concern at ESPN. They have to constantly meet the growing monetary demands of leagues like the NFL, NBA and MLB for television rights while more people flock to streaming services like Netflix, Amazon Video, PlayStation and others. Luckily for ESPN, their parent company Disney just handed them a big-time weapon in that fight.
Last December, The Walt Disney Company and 21st Century Fox announced their plan for a $52 billion merger. This would mean Disney would own television shows like “Modern Family,” “This Is Us,” “The Simpsons” and “Empire” among many others because they’re all produced by Fox Television. They would also own Fox’s movie studios as well.
Disney would also gain rights to comic book characters to use in their movies like the X-Men, Deadpool and The Fantastic Four, which is particularly exciting for a comic nerd like myself.
But perhaps the most significant part of the merger is Disney’s acquisition of 21st Century Fox is the Fox Sports properties. Disney opted not to take Fox’s own attempt at its main sports entertainment channel, Fox Sports 1, as it was neither popular nor lucrative but instead will acquire all of Fox’s regional sports networks.
Houston is an abnormality because the Rockets and Astros both have television rights with AT&T SportsNet but if someone in San Antonio wanted to watch the Spurs, they would have to tune in Fox Sports Southwest. Same thing for fans of the Dallas Mavericks or Texas Rangers.
Essentially the one leg up Fox Sports truly had on ESPN was their monopoly on local sports coverage. ESPN covered everything on a national scale while if you wanted a television show that discussed just your local teams, Fox Sports was the place to go.
If this merger goes through then ESPN will have absolute control over both the national and local scale. Not much will change for the casual viewer in all likelihood besides different
graphics and commercials but for ESPN, this is the biggest news of the 21st century for the company.
ESPN will own 44 stations that will cover regional games of the NBA, NHL and MLB. A Washington Post article reported that Fox’s regional sports networks are worth $20 billion alone which accounts for 38 percent of the $52 billion merger.
That’s not all ESPN is going after either. Realizing that streaming is clearly the viewing preference of the future, the company announced plans for ESPN Plus. Plus is a digital-only streaming service that ESPN has been working since August of 2016 and will launch later this month or early April. It requires a monthly subscription for $5 to use.
It will feature live television of events like college sports, soccer, hockey, boxing, golf and international sports like cricket and rugby. While critics have pointed out there is a fair assumption it will be a rough start due to the fact you’ll still need to have a subscription to a traditional cable company to watch NFL, NBA and college football games.
Despite this, it shows ESPN knows the direction they have to go to stay atop the mountain and if ESPN Plus does fail, it provides a good general framework to continue to produce streaming-friendly services. Streaming is a particularly important area for ESPN as it opens the door for more ad revenue, an area ESPN was down 11 percent in last year.
The one big obstacle standing in the way of ESPN’s new resurgence is none other than the Department of Justice. There have been staunch critics of the entire merger as it would create a Disney monopoly over several areas, sports being one of the biggest ones. There is a chance they will block the merger but that decision won’t come for another year or longer.
If the merger does go through, ESPN will have a new arsenal to attack falling ad revenue and rising professional sports league television contracts. It’s been a few years of struggling to adapt to the new world of entertainment for ESPN but they’re now in a position to solidify their place atop the sports entertainment world.
Tad Desai covers sports and education for The Sealy News. He can be reached at 979-885-3562 or via email at email@example.com.