Disney's Iger Needs To Decide ESPN's Future

For decades, ESPN was the ultimate cable TV cash cow, exacting a “tax” of several dollars of month in carriage fees from every U.S. cable TV household, every month, even of most subscribers never or seldom watched.

That worked great until tens of millions of households started cutting the cable/satellite/virtual MVPD cord, sending penetration levels (and carriage fees) from around 100 million households to what’s now estimated at somewhere south of 60 million.

The results at ESPN were predictable, but hardly welcome for the hardcore sports fans who feast on not only the live year-round games on the network but its iconic SportsCenter nightly wrap-up show and endless deep dives on a wide range of prominent pro, college and even high school players, teams and leagues.

Over the long holiday weekend, news seeped out that the fourth major cut in employees at ESPN was taking effect. The ESPN cuts were part of 7,000 layoffs Disney has implemented companywide over the past several weeks as it grapples with a variety of financial challenges. But these cuts involved people that viewers know. And they won’t be the last ones.

According to David Bloom writing for Forbes, the biggest question for Disney, should Disney finally make ESPN+, its undernourished streaming service, a real thing, a service that sports fans at least would pay for?

Iger and ESPN chieftains have been pondering thart question for years, but a changeover to streams comes with many risks, like whether cable providers would demand a significant cut in carriage fees because of the lost exclusivity. Such a shift likely would be exchanging cable dollars for streaming nickels.

All that would come as the many billions of dollars that ESPN/ABC/Disney have invested in rights to NFL and college football, the NHL, Major League Baseball and the NBA (whose renewal rights are coming up next year) will start to pinch the company’s bottom line just as big tech-backed streamers such as Apple (MLB and Major League Soccer) and Amazon (the NFL) aggressively bid for live sports rights.

It won’t be a pretty next couple of years as Iger, under a two-year contract that’s already more a quarter done, tries to figure out the future path for Disney as a whole and for ESPN as one of its most significant pillars.