We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ESPN To Cut The Cord, But Will it Help Disney (DIS) Shareholders?
Read MoreHide Full Article
According to a report from The Information, Disney (DIS - Free Report) -owned ESPN will sell its own streaming live TV package directly to consumers in the near future. The report is in line with previous comments made from Disney CEO Bob Iger, who earlier in the year mentioned that a direct-to-consumer package from ESPN was on the table.
Apparently the new package won’t include blockbuster items like professional basketball or football, but will include “niche leagues” and possibly some college sports. ESPN’s goal for the package would be to get customers that don’t currently subscribe to pay TV, as well as to see what sports fans are willing to pay for in terms of streaming. The package’s attraction will be similar to that of an HBO Now or Hulu, that allow for the streaming of material one could get on TV.
The idea of streaming material that is available on paid TV also does not alienate those who already pay for a cable bundle, or cause them to switch over the streaming service instead. ESPN knows that the switch from cable to streaming services by consumers is already negatively affecting the company, as the president of ESPN John Skipper even admitted it earlier in the year, and the company needs to adapt to the current trend.
Despite ESPN’s revenues from subscription fees growing, the network is still missing out on a great deal of potential revenue because of the cord-cutting movement to streaming services. As of the end of 2015, ESPN had lost about 7 million subscribers in the previous 2 years, which equates to the network missing out on potential revenue of $1.3 billion.
Why Does it Matter?
One may ask, without popular sports like football and basketball, what’s the point of a streaming package like this? The network already allows consumers to stream sporting events through the ESPN mobile app through cable providers, and it’s unclear how large the market for this new package even is if it won’t contain the bigger blockbuster items.
It could be seen as an initial launch, or a feeler, to see how the broader market responds to such an offering. If this new package of more niche sports is received well, maybe Disney and ESPN will consider rolling out a broader package, or entirely different ones, that include other, more watched sports.
Bottom Line
Disney currently holds a Zacks Rank #3 (Hold), and its shares are down just over 5% year-to-date. While the impact of rolling out such a niche sport-centered package is relatively unknown, if ESPN were able to lower the cost of a potential streaming packing, it could provide a major boost to the network, and to its parent company Disney. Until such a package that includes the larger sports comes about though, consumers and investors will have to see how the niche sport package performs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
ESPN To Cut The Cord, But Will it Help Disney (DIS) Shareholders?
According to a report from The Information, Disney (DIS - Free Report) -owned ESPN will sell its own streaming live TV package directly to consumers in the near future. The report is in line with previous comments made from Disney CEO Bob Iger, who earlier in the year mentioned that a direct-to-consumer package from ESPN was on the table.
Apparently the new package won’t include blockbuster items like professional basketball or football, but will include “niche leagues” and possibly some college sports. ESPN’s goal for the package would be to get customers that don’t currently subscribe to pay TV, as well as to see what sports fans are willing to pay for in terms of streaming. The package’s attraction will be similar to that of an HBO Now or Hulu, that allow for the streaming of material one could get on TV.
The idea of streaming material that is available on paid TV also does not alienate those who already pay for a cable bundle, or cause them to switch over the streaming service instead. ESPN knows that the switch from cable to streaming services by consumers is already negatively affecting the company, as the president of ESPN John Skipper even admitted it earlier in the year, and the company needs to adapt to the current trend.
Despite ESPN’s revenues from subscription fees growing, the network is still missing out on a great deal of potential revenue because of the cord-cutting movement to streaming services. As of the end of 2015, ESPN had lost about 7 million subscribers in the previous 2 years, which equates to the network missing out on potential revenue of $1.3 billion.
Why Does it Matter?
One may ask, without popular sports like football and basketball, what’s the point of a streaming package like this? The network already allows consumers to stream sporting events through the ESPN mobile app through cable providers, and it’s unclear how large the market for this new package even is if it won’t contain the bigger blockbuster items.
It could be seen as an initial launch, or a feeler, to see how the broader market responds to such an offering. If this new package of more niche sports is received well, maybe Disney and ESPN will consider rolling out a broader package, or entirely different ones, that include other, more watched sports.
Bottom Line
Disney currently holds a Zacks Rank #3 (Hold), and its shares are down just over 5% year-to-date. While the impact of rolling out such a niche sport-centered package is relatively unknown, if ESPN were able to lower the cost of a potential streaming packing, it could provide a major boost to the network, and to its parent company Disney. Until such a package that includes the larger sports comes about though, consumers and investors will have to see how the niche sport package performs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>