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Disney Shifting Focus To Digital Products, What Does It Mean For ESPN?

“ESPN+ costs $5.99 per month and watching Watch ESPN content requires a cable or satellite subscription.”

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Disney CEO Bob Chapek was on CNBC on Monday to talk about the company’s future business plans. Earlier in the day, the company had issued a press release saying that it was restrutcturing to make its direct-to-consumer digital products its focus.

“We believe we’ve got the opportunity to build upon the success of Disney+, which by almost any measure has been far and above anybody’s expectations,” he told CNBC.

Chapek would not give any subscriber numbers or future projections for the company’s digital products. He did say that Disney+, ESPN+, and Hulu all have exceeded the company’s expectations and continue to do so each month.

Covid-19 has taken a serious bite out of other divisions in the Walt Disney Company this year. Its global theme park business has been in the toilet. Multiple feature films have been scrapped, delayed, or in some cases, forced to a pay-per-view model on Disney+, which lead to significantly lower revenues than initially projected. The streaming businesses are thriving though.

So what does this mean for ESPN and the sports world? Outkick’s Ryan Glasspiegal writes that the effect may not be obvious right away, but the model for live sports will eventually evolve.

“An emphasis on direct-to-consumer streaming will inherently mean further movement away from their previous modes of distributing movies through theaters. It will probably happen a little slower, but sports will also continue to migrate away from traditional TV networks.”

All cable networks have been hit hard by cord-cutting, which isn’t a new phenomenon, but the ESPN family of networks’ subscriber fees are the highest in the industry, meaning that fewer cable subscribers hits that network harder than any other. With 20 million fewer subscribers than the network had just ten years ago, it is missing out on about $20 million in revenue each month that it used to count on.

News broke last week that ESPN is bracing for a major round of layoffs. It seems inevitable given that revenue is down and recent stories about negotiations with the NFL and Major League Baseball prove that rights fees for live sports are not following suit.

So what does that mean for the future of the cable network? It is hard to say exactly. ESPN+ has slowly increased its offerings both in terms of live sports and original content. The service also has a pay-per-view deal in place with the UFC. Between it and the Watch ESPN offerings through ESPN.com, it isn’t impossible to think that the network could become a completely digital product.

In order for that to be successful, ESPN will have to figure out how to package and sell a subscription. ESPN+ costs $5.99 per month and watching Watch ESPN content requires a cable or satellite subscription.

Figuring out a fully digital pricing model is something ESPN should probably figure out how to do sooner rather than later anyway. We may be a few years away from leagues selling exclusive video rights to digital companies, but Amazon already has deals with Thursday Night Football and the New York Yankees amongst others. Apple is reportedly kicking the tires on PAC-12 football. We are far enough down the road that exclusive rights deals going to tech companies instead of television networks does not seem absurd.

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David Kaplan Leaving NBC Sports Chicago

“I was presented an opportunity that will allow me to spend a lot more time my wife, Mindy, our four sons, and their expanding families. This is far from a retirement.”

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David Kaplan has announced he is departing NBC Sports Chicago. In a video posted to his YouTube channel, Kaplan said a new path opened that he couldn’t turn down.

“I was presented an opportunity that will allow me to spend a lot more time my wife, Mindy, our four sons, and their expanding families. This is far from a retirement. You’ll still be able to catch me weekday mornings with Jonathan Hood on the Kap and JHood morning show on ESPN 1000. It will also allow me to provide you with more engaging and outstanding content right here on YouTube.”

Kaplan, who will turn 62 this weekend, accepted a buyout offered by NBCUniversal. He has hosted several different shows for the network during his tenure.

“He’s made enormous contributions to our network, and his passion, opinions and love of Chicago’s teams have made him a beloved and respected figure, not just with fans but also his colleagues,” NBC Sports Chicago Vice President of Content John Schippman told The Chicago Sun-Times. “We wish him the best and look forward to seeing what’s next.”

December 30th will be his final day at NBC Sports Chicago. He called his time with the network “an amazing run”.

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NASCAR Chasing Nearly $1 Billion Annual Rights Fee In Next TV Deal

“We work really closely together, both from a scheduling perspective, but also just in terms of how they monetize the sport.”

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The current media rights deal for NASCAR with FOX Sports and NBC Sports doesn’t end until after the 2024 season, but the organization is currently plotting what it wants its next deal to look like, according to a report from Front Office Sports.

Currently, NASCAR makes $820 million per year from the two networks. In its new rights deal, it is expected to seek a deal in the neighborhood of $900-950 million range.

NASCAR plans to begin negotiating with its current media partners in the early months of 2023, but is currently happy with FOX and NBC.

“We work really closely together, both from a scheduling perspective, but also just in terms of how they monetize the sport. Whether that’s pushing more brands and advertisers to spend on Fox and NBC,” NASCAR Senior Vice President of Media and Productions Brian Herbst told FOS. “Fox had their third consecutive year of ad revenue increases in 2022. NBC had their second consecutive year of ad revenue increases in 2022. So it’s working for them — both from a viewership and an ad revenue perspective.”

In February of this year, NASCAR President Steve Phelps told the Marchand and Ourand Sports Media Podcast that broadcast television “has to be a part” of the organization’s next television rights deal.

As its current media partners, FOX and NBC have exclusive negotiating windows with NASCAR.

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NFL Sunday Ticket Negotiations With Apple ‘Have Gotten Silly’

“Apple’s like, ‘OK, we can’t sell internationally. OK, that was important to us. And we can’t sell it exclusively against Fox and CBS. Well, OK. Well, that changes its value.’”

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A report from The Athletic details why the NFL has not announced a new partner for the NFL Sunday Ticket package. David Kaplan claims there have been continued hiccups in the negotiations, mentioning the bargaining has gotten sideways between the league and Apple.

“This negotiation has gotten silly. … Clearly, there’s a problem. I think it’s really clear Apple is learning things they didn’t know,” the anonymous NFL source told Kaplan. “What the conversation is, is Apple’s like, ‘OK, we can’t sell internationally. OK, that was important to us. And we can’t sell it exclusively against Fox and CBS. Well, OK. Well, that changes its value.’”

The report also details Amazon Prime and YouTube remain in the mix as potential suitors for the service, should talks with Apple and the league fall apart.

The NFL is looking for as much as $3.5 billion annually for rights to the service.

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