With “Star Wars” shattering box-office records, it took a true force to cast a dark shadow over Disney’s earnings. Yet that’s the role being played by ESPN, which, with the end of another college football season, continues to illustrate why even die-hard sports fans have such a love-hate relationship with what has become much more than a mere network in terms of influence and power.
ESPN stands out as a primary potential victim of cord-cutting, the phenomenon in which people decide they can meet their entertainment needs minus the expense of cable or satellite. And while the sports network has sought to inoculate itself against those effects by investing massive sums to corral TV rights — including college football’s top bowls and national championship game — the continued billions its channels rake in from subscriber fees appear more tenuous, certainly in the long run, than anyone might have imagined even a few years ago.
As Fortune reported over the summer, “The big fear is that the network’s lucrative stranglehold on sports is disintegrating, pulled apart by a combination of cord cutting, streaming via digital services and competitive pressures from all sides.” And because ESPN receives an estimated $6.60 per subscriber each month, that still totals more than $7 billion a year before any additional revenue is thrown in, accounting for more than half of Disney’s annual profit. ESPN responded to the trends with layoffs, delivering a blow to corporate morale.
|“The network’s institutional arrogance has injected no shortage of schadenfreude into analysis of the challenges it faces.”|
As with all things pertaining to the stock market, there might be a bit of overreaction in “the sky is falling” response to ESPN’s loss of subscribers, down about 7% from 2013, to 92 million households in the U.S. Still, the network’s institutional arrogance — by seeking to monopolize not just sports rights, but also the very way in which games are scheduled and presented — has injected no shortage of schadenfreude into analysis of the challenges faced by the cable titan, which has earned the nickname “the evil four letters” among more than a few in the sporting world.
Specifically, ESPN’s billions have not only bid up prices for all networks that carry sports, but also have helped turn virtually all sports events into fodder to feed the channel’s inexhaustible appetite for programming. In December, that could be witnessed in the proliferation of meaningless bowl games (almost all of them carried by ESPN) and college basketball tournaments, with many of them played in conspicuously half-empty arenas and stadiums.
ESPN has long since made the experience for fans who attend games in person secondary to the requirements of TV, beginning with the time kickoff or tipoff takes place. As the New York Times noted in an exhaustive piece detailing the network’s dominance, “The extent of ESPN’s influence over college football is literally displayed on the face of your ticket,” because its scheduling gurus have the right to set kickoff times, sometimes as little as six days before a game. Moreover, many marquee matchups are not just televised by the cabler, but arranged by it: “creations of ESPN — demonstrations of the sports network’s power over college football,” per the Times.
To be fair, ESPN delivers plenty of benefit to discerning sports fans, such as its classy “30 for 30” documentaries. And given the continuing popularity of live sports — and its importance to the advertising community as a hedge against the susceptibility of entertainment programs to time-shifted playback with viewers skipping through commercials — even a somewhat diminished ESPN should remain a formidable enterprise for years to come.
Then again, the ultimate allure of sports is that unlike so much entertainment, you don’t know exactly how it’s going to turn out. Having done all it can to rig the game in its favor, it seems even ESPN is discovering that in today’s media world, everyone is operating without a clear rulebook — and no outcome is certain.