ESPN’s Profits Dip 20% Highlighting Why Disney Is Looking for Partners to Move Channel to Streaming
Disney offered a glimpse of ESPN as a standalone business, and revealed that while the channel is still profitable, cord cutting is definitely having an effect on its bottom line.
Cable doesn’t have a lot of pillars left to lean on, but one of the strongest remaining is live sports. ESPN was rated as the most in-demand cable channel of them all in a September survey, as 74% of respondents identified it as a “must-have” channel.
- Disney revealed this week that profits at ESPN have dipped by 20% in 2023.
- ESPN is looking for multiple partners to purchase minority stakes as it pivots to streaming.
- Cable revenues will continue to dwindle with cord-cutting, demonstrating why distribution of a new ESPN streamer is critical to Disney executives.
Mouse House or Poor House?
The popularity of ESPN has remained steady, even as cord-cutting has bitten deeply into the number of customers available to purchase the channel through cable or satellite. The departure of so many thousands of viewers from the cable ecosystem has had an effect, however; Bloomberg reports that ESPN’s profits have dropped by 20% so far in 2023 as compared to fiscal 2022.
In Disney’s last fiscal year, ESPN brought in $2.71 billion of operating income based on sales of $17.3 billion. So far in its fiscal 2023, the channel has accrued $1.48 billion on sales of $13.2 billion. The channel is still profitable overall, but it’s undeniably suffering from the departure of so many users from cable and satellite. The numbers help explain why ESPN is looking to pursue a smaller package of NBA rights when its current deal with the league expires after the 2024-25 season.
Helping Hand
The dip in profits from ESPN shows why Disney is so eager to get moving on a direct-to-consumer (DTC) streaming version of the channel and its sibling networks that won’t require a cable subscription to access. ESPN is still clearly an in-demand product, but fewer and fewer users are willing to go to traditional access points to watch the channel.
It also clearly outlines why the company is looking to sell minority stakes in ESPN to multiple outlets. Replicating the distribution of the cable model will be critical for Disney if its ESPN streaming service is to succeed; the company essentially forced providers to include ESPN in their base packages, so the channel was in place in hundreds of millions of homes in cable’s heyday.
Disney is reportedly looking to team with mobile providers like Verizon and digital platforms such as Apple and Amazon to boost distribution of the ESPN streamer as widely as possible. Selling minority stakes in ESPN to these companies could allow the channel to achieve an international penetration level that it has never seen before, but the streamer has to walk before it can run.
The 20% drop in profits at ESPN has more to do with the state of the cable industry as a whole than it does with ESPN’s specific popularity. But it does underscore the challenges facing the channel and its parent company as Disney prepares to launch a streaming-only version of the ESPN networks that incorporates the content currently available on ESPN+.
ESPN+
ESPN+ is a live TV streaming service that gives access to thousands of live sporting events, original shows like Peyton’s Place, the entire library of 30 for 30, E:60, The Last Dance, as well exclusive written analysis from top ESPN insiders. Sports available on ESPN+ include NFL, MLB, NHL, UFC, College Football, F1, Bundesliga, PGA Tour, La Liga, and more.