ESPN will look dramatically different in 1 year

Yahoo Finance reports on ESPN:

ESPN is adapting to the realities facing all media companies: consumers only want to consume the content they want, and increasingly they want to consume it on a phone, computer, or tablet, not a television, and they don’t want to pay to get something they don’t want. You would think these maxims are obvious by now, but much of the cable industry is built on the opposite—bundling channels together for a fat monthly fee. Yahoo Finance Editor-in-Chief Andy Serwer put it well on our live show this week: “Because they’ve been part of the bundle, a lot of people have been paying for ESPN who don’t want to watch it. That’s not a great business model, people paying for something they don’t want.”

In Disney’s Q1 2017 earnings in February (it will report Q2 earnings May 9) it reported that operating income for its cable networks division, which includes ESPN, fell 11% to $900 million. Why? The company didn’t mince words: “The decrease in operating income was due to a decrease at ESPN… Operating income at our other cable networks was essentially flat.” In other words: ESPN, increasingly, is the dark cloud in Disney’s quarterly earnings reports.

But don’t mistake this: ESPN is profitable. It makes a lot of money. It’s simply making less money than it did in the past. Why? Cord-cutting. Or, to put it in financial terms: rising programming costs, falling subscription revenue. (And FS1 faces the same problem.)

To adapt, ESPN is overhauling all of its content. One year from now, ESPN will look like a dramatically different network.