UPDATE: This version of the story amends comments made by cable executive Leo Hindery to explain that cable sports packages--the largest being ESPN, but including other regional, college and middle-size sports networks-- add $35 to $40 a month to subscribers' monthly cable bill.
By the time The Walt Disney Co. acquired ABC/CapCities in 1995 for $19 billion, the investing and professional TV viewing world was already getting a little bored with broadcast TV’s big tent. It took about five minutes for everybody to figure out what while the legacy ABC network seemed like the target of the acquisition, Disney was really buying ESPN, already a cable sports colossus that was going to get even more colossal.
No cable outlet could be without ESPN, and cable outlets paid through the nose for it. As the Daily Beast put it just a little while ago:
“As the keystone of the ‘bundle’—the core multichannel offering from cable and satellite operators—ESPN was able to jack the wholesale rates charged to cable operators each and every year while letting those same operators take all the heat for consumer rate increases. The network’s bulging wallet allowed it to outbid competitors for all nature of sports programming rights, and sadly for consumers, its successful business model was quickly copied by new regional, collegiate, and team-owned sports networks.”
Leo Hindery, a veteran cable operator and a founding father of the Yankees’ Yes sports network, told Bloomberg news that ESPN and other regional, collegiate and smaller sports cable networks now costs every cable subscriber between $35-$40 a month, whether they know one end of a football from the other.
So when ESPN reported earlier this month that it has lost 7 million subscribers over the last two years, due to cord cutters, that caused some major Disney investor sturm-und-drang, regardless of how boffo the new “Star Wars” movie was performing.
"ESPN now appears poised to become Disney's most troubled business as consumer behavior shifts rapidly," warned influential BTIG analyst Richard Greenfield, who issued a sell recommendation last week, leading to an immediate 3.6% dump on Wall Street. (Until March, he had been recommending a buy for the last five years.)
Those cable defections are the main reason for ESPN’s declines. But so is the the suspicion that ESPN can’t easily go where the fans are going. That's not where its head is at. It is the least likely to initiate an over-the-top version of itself because it can’t afford to lose even more cable eyeballs, and as Greenfield surmises, even if it would go over the top, ESPN’s sports menu is too fat for most tastes to pay for.
“The reality is doing it in the U.S., actually launching that business, would be a very bad decision for Disney,” he told Sports Business Journal.
At the same time, smart sports video watchers like SBJ’s savvy John Ourand predicts that in 2016, ESPN’s total cable subscription count will fall below 90 milion. It hasn’t been down there since 2005.
Cord-cutters, who started this problem by essentially avoiding paying for ESPN, are bunched up among millennials, which ought to be an indicator of rougher sledding for ESPN. The sports network seems increasingly distant from the reality of younger viewers.
Indeed, Whistle Sports, the streaming service that just lives by social media and calls itself "the global sports community for today’s fans," did its own research to discover that for sports video, consumers 13-24 first go to YouTube (64%), then Facebook (53%) and third, ESPN (42%). Among slightly older viewers, ESPN still leads, but not by much.
Today, Whistle Sports is announcing that Dude Perfect, five kind of crazy guys who challenge themselves to sport-like stunts -- and have 1 billion with a B video views-- have become its first official brand ambassadors, a title that gives a whole new warp to the word “ambassador.”
Whistle Sports says the arrangement expands its ability to create and deliver “sponsorships, brand integrations, advertisements, co-promotions and commercial tie-ins with the Dudes.”
At the same time Whistle Sports said some of its original content for Verizon’s mobile-first Go90 video service will debut in January, a perfect place for a quick-hit sports video hub. WhistleSports is neither too serious nor sports “team” oriented and in that way is nearly perfect opposite of the earnest, shouting tie-and-suit guys arguing over professional millionaire sports stars on ESPN.
With a reach of 150 million, Whistle Sports’ audience grows by over 2.5 million each week, another potent indicator of sports’ new winners and a startling sign that the sports media world is email@example.com