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Despite Problems at ESPN, Disney Doubling Down on Sports

ESPN is going through hard times, as it is losing subscribers, viewers and has cut hundreds of its staff.

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However, Disney, the owner of ESPN, on Thursday doubled down on sports when it agreed to buy 22 regional sports networks in its $52.4 billion deal to purchase 21st Century Fox.

The deal is a sign that Disney believes in the on-demand era that is making it difficult to get viewers to watch commercials, but that sports remains one product where fans still need to watch live action.

Assuming the Disney Fox deal is approved, Disney will then have substantially more sports programing that ever before.

CEO of Disney Bob Iger said that 22 regional sports networks will be an excellent complement to the current offerings on ESPN.

ESPN has been a national sports network from the start, signing rights deals in the billions of dollars with leagues and not specific teams.

However, fans watch the majority of the major team sports in the U.S. on their local networks. The 22 included in the deal broadcast many of the games. They have television rights deals with half the teams in Major League Baseball, and 17 of the 30 in the NBA and 12 of the 30 in the NHL.

ESPN will control those rights, giving them the access to more sports fans, and fans at a local level watching the regional networks are more loyal.

ESPN has been for a long time Disney’s most profitable segment dwarfing profits from movies and theme parks.

However, while the network still can command top dollar from the cable operators for each of their subscribers, the number of subscribers in the U.S. has been falling at a steady rate from its 100 million high during 2010 to only 88 million this past September.

That is for the most part due to Americans cutting the cord, stopping the purchase of expensive satellite or cable packages in favor of watching streaming services.

Fewer viewers equal less revenue from advertising and because of that ESPN laid 250 staff off in 2017, including on-air, high-profile commentators.

However, the business is still relatively healthy, generating the majority of the $7 billion earned by Disney last year from its different media networks.

Both ESPN and Disney are preparing for when satellite and cable systems are a thing of the past, buying a majority stake in BAMTech, a streaming tech company whose list of clients includes HBO Now.