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Understanding Disney's ESPN Problem in 10 Slides

Image source: Disney.

ESPN is the world's most valuable television channel, with estimates placing its worth at between $40 billion and $50 billion.

Disney currently has a market cap of roughly $154 billion.

Image source: Disney.Infographic source: LTC Commission report pg 23

Image source: Disney.Disney's media networks segment accounted for roughly 44% of the company's $52.46 billion revenue last year. ESPN is the company's most important channel, by far.

Infographic source: LTC Commission report pg 23

A report from SNL Kagan suggests that ESPN generated revenue of $10.8 billion in 2014.

Wunderlich Securities estimates that more than 60% of ESPN's revenue comes from affiliate fees.Image source: Pexels.

Infographic source: LTC Commission report pg 23

In 2011, ESPN hit its peak subscriber count at 100.1 million. Nielsen data indicates that the network has lost more than 11 million subscribers in the last five years. Infographic source: LTC Commission report pg 23

Nielsen data shows that ESPN has lost more than 4 million subscribers in the last year alone.

Attrition is accelerating due to cord cutting.Image source:Pexels.

Infographic source: LTC Commission report pg 23

ESPN has the highest affiliate fees of any channel. These costs are paid by cable providers and passed on to consumers.

In 2014, ESPN generated $6.04 in monthly fees per subscriber, with the next largest affiliate earner being Time Warner's TNT at $1.48. Infographic source: LTC Commission report pg 23

SNL Kagan estimates ESPN's 2016 affiliate fees at $7.21 per month, and expects this figure to rise to $8.80 per month in 2018.

Image source: Disney.Infographic source: LTC Commission report pg 23

Many cable subscribers pay for ESPN but do not watch the channel or watch it rarely.

A survey from Beta Research found that the average cable subscriber valued ESPN at $1.45 per month. Infographic source: LTC Commission report pg 23

Securing the rights to high-value sports content is becoming increasingly expensive, but rising affiliate fees means that cable bills will continue to go up for customers.

Infographic source: LTC Commission report pg 23

Rising cable prices will likely accelerate cord cutting trends, and, while over-the-top services represent opportunities to provide supplementary affiliate revenue, ESPN's overall subscriber base will continue to shrink.

Subscription trends and content costs will put significant pressure on ESPN and the revenue and profitability of Disney's media networks segment by extension.

Infographic source: LTC Commission report pg 23

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