What does the future hold for ESPN, the “worldwide leader” that has been letting high-priced, highly visible talent go in widely-scrutinized cost-cutting moves this summer?
Bob Iger, the head of ESPN’s parent company Walt Disney, sees continued unbundling by consumers and envisions a time when the network’s content could be sold directly to consumers, the way HBO is.
“If we end up seeing more erosion in the so-called multichannel [cable and satellite TV] bundle, quality will win out,” he told CNBC’s “Squawk Box.”
“While the business model may face challenges over the next few years, long term for ESPN … they’ll be fine. They have pricing leverage, too,” Iger said. “Disney [Channel] is another … brand and product that could be sold directly to the customer.”
Iger is optimistic over the long-range future, but the transition will be difficult. Subscribers, whether they like sports or not, pay $6.10 in subscriber fees now and that would disappear with unbundling. Michael Nathanson, of MoffettNathanson Research, told Forbes that the cost of the network a la carte would be $36.30 a month. From Forbes’ Dorothy Pomerantz:
Those number are, of course, ridiculously high and they’re even worse when you look at what people believe they should be able to pay for something like ESPN a la carte. Beta Research found that the perceived value of ESPN to viewers is $1.45 per month — a $34.85 difference between what they would actually be asked to pay.
Do sports matter that much to people?
A USA Today poll showed that 95 percent of over 28,000 voters would not pay that much. Would you?