A shift from traditional television to streaming is inevitable for ESPN, Disney CEO Bob Iger said in a conference call with analysts and investors Feb. 8. The removal of ESPN from linear models could lead to other sports programming doing the same, which could contribute to huge losses for traditional television companies.
More than 30 percent of U.S. linear television ad revenues come from live sports, despite sports only accounting for 8 percent of total viewing time, Nielsen Sports reported last year.
“ESPN+ actually has grown nicely for us,” Iger said in the call. “We are going to continue to look at that as a potential pivot for ESPN away from the linear business.”
U.S. consumers have been increasingly cancelling their traditional television services in recent years. In 2010, more than 105 million U.S. households paid a cable, satellite or telephone company for their television access, accounting for 91 percent of households. That number dropped to 60 percent in 2021, and is expected to fall below 50 percent in 2026. But sports programming is still a selling point for linear television. Contract rights determine what providers broadcast which games, and without a pay-television subscription, it can be difficult for fans to access all the games they want, even from one team.
The Carolina Hurricanes, a professional hockey team based in North Carolina, has its games broadcast on Bally Sports, ESPN and TNT. From January to February, games appeared on the three different networks. Without a pay-television subscription, fans would need to pay for three different streaming services to watch the team.
Linear television companies must also now compete with streaming platforms for access and viewers. Amazon Prime Video bought the rights to Thursday Night NFL games, and YouTube TV will begin streaming NFL games this year. ESPN+ bought the rights to exclusively stream more than 100 NHL games and pay-per-view Ultimate Fighting Championship events. Comcast’s Peacock shows four to six exclusive Premier League soccer games each weekend that used to run on NBC’s networks.
Iger didn’t give any indication when Disney might shift ESPN to a streaming-only platform, but it likely won’t be soon. While streaming is the future, Iger said in the call, it “is not delivering the kind of profitability or bottom line results that the linear business delivered for us over a few decades.” The company is in a transition period, but one that is heading towards streaming, he said.
