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Iger: We’re More Bullish on ESPN Sub Base

After taking it on the chin regarding subscriber declines at its flagship ESPN sports network, The Walt Disney Co. says new deals and technologies will help drive growth in a segment that hasn’t had it for years.

“We have taken a more bullish position on the future of ESPN’s sub base,” Iger said. “We think that while we were candid a year ago on sub losses, we believe that to some extent the causes of those losses have abated, notably the migration into smaller packages. But we also believe that new entrants to the marketplace, particularly digital MVPDs are going to offer ESPN opportunities that they haven’t had before to reach more people. We think those offerings, because of their pricing, the user interface, their mobile friendly nature, are likely to cause more millennials to either stay in the multichannel ecosystem as subscribers or to enter it when they might not have in the past.”

Disney first admitted it tasted subscriber losses in the summer of 2015, when it said basic subscribers of its ESPN channel had declined by about 3 million in the prior 12 months. That news sent its stock and those of fellow cable programmers into a tailspin from which the sector still hasn’t fully recovered.

And on Oct. 28, Nielsen drove another nail in to Disney’s subscriber coffin, announcing November estimates for ESPN that were down by 621,000 subscribers, double its previous estimates and a new record for the company.

Disney disputed the Nielsen results at the time they were released and still does. Nielsen has said it stands behind the numbers.  Iger said Disney refuted the Nielsen numbers because it had received lower loss estimates from reliable third parties and that Nielsen does not count digital subscribers, a growing segment that Disney believes should be included in the mix.

“We’re realistic about what we’ve seen with recent subscriber trends,” Iger said. "We think the long-term prospects for ESPN are good.”

Disney also has the ability to go direct-to-consumer – it will offer an ESPN direct-to-consumer offering in early 2017 – and its recent investment in MLB BAMTech will only improve that.

Disney plans to launch a direct-to-consumer ESPN product fueled by MLB BAM technology early in 2017.

Iger also hinted that Disney is interested in getting into the acquisitions game, but stopped short of naming any targets. Disney had been rumored to be in the hunt for social media pioneer Twitter a few months ago,  and speculation about a Netflix-Disney pairing has been rampant for years. Earlier today, deal legend Liberty Media chairman John Malone speculated that Disney could spin-off ESPN as a separate company to make itself more attractive to a suitor like Apple. 

Iger again wouldn’t name names, but said that any purchases would have to be centered on improving the customer experience, along the lines of its recent investment in MLB BamTech.

“We think there are some really interesting opportunities, given what’s going on from a technological perspective, to improve our business and to improve the consumer experience by selling directly to consumer,” Iger said. “We are considering and exploring various ways to accomplish this. We think it is something that is important for us to do.”

Iger also commented on recent ratings declines for National Football League games, adding that several factors have contributed to the decline, including the World Series, the Presidential debates and less than compelling matchups.

“It’s a little too soon to jump to conclusions,” Iger said. “We’re being patient about it. We’re going to look at the trend lines and continue to watch it. It’s far too early for us to suggest that we’re concerned. It’s still the highest rated sports programming that’s out there and we’re think we’re lucky to have it licensed on a long-term basis.”