WhatYouPayForSports
So @drewharwell wrote this @washingtonpost piece on #Disney & #ESPN. I need to point out a few things.
https://www.washingtonpost.com/news/the-switch/wp/2015/12/28/disney-has-a-money-problem-that-even-star-wars-cant-fix/ …
One, the fact that 45% of Disney's profits come from cable TV is staggering. And that WILL change in the next five years.
Two, ESPN's carriage fee goes up 6.5% every year. That's baked into its contracts with pay TV carriers...
...so if fewer than 6.5% of all #ESPN subscribers (i.e., 6 million subs) #cutthecord, ESPN's carriage fee revenue still goes up in 2016.
One other thing: #ESPN bakes annual escalators into its rights deals, too. Pac-12 deal has a 5.1% escalator. http://www.al.com/sports/index.ssf/2013/06/ed_obannon_lawsuit_reveals_ter.html …
And chances are something near a 5.1% escalator is part of every rights deal #ESPN has. That's what will hurt profits the most.
Wall St. sees problems ahead for #ESPN, and they're not wrong. The question is when. We've still got a few years before a full meltdown.
Interesting that this all comes at a time when the Big Ten media rights are up for sale, huh?
ReplyDeleteI would bet ESPN goes all in on SEC and B1G, the 2 most stable products, and bails on everything else.
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