Disney Wants Sports League As Partners: They Are Screwed

Disney is one of the most iconic names in entertainment. It is also going down the toilet.

Here is where things stand:

• the company lost $512 million in the most recent quarter
• it has $44.5 billion in debt
• it still owes Comcast $9.2 billion for a minority stake in Hulu
• there was a loss of close to $1 billion on movies it released this year
• the most recent quarter saw a decline of 7 million streaming subscribers
• in response it raised the price of Disney+ by $3

The company also destroyed, according to many, the Marvel and Star Wars franchises.

All of this is leading to a nightmare for CEO Bob Iger.

Of late, I wrote a great deal about Disney and ESPN. The reason: we are looking at the decline of one of the most iconic brands right before our eyes. This company is torched and we have a front row seat.

ESPN: A Total Dumpster Fire

ESPN was the name in area of sports broadcasting.

Like many things in this sector, this now is a total dumpster fire. Iger is on a quest to cut $5.5 billion in expenses. ESPN recently had a long list of layoffs. This included many on air personalities.

The company is now looking to partner with the major sports leagues. Disney is having a cash crunch and it is looking to save money. It is believed that the company will give equity share in ESPN in lieu of cash payments on the contracts.

This is a total joke.

Why would the leagues want to partner with ESPN? The company is losing subscribers as cord cutting takes place. Streaming is losing a fortune.

And to make matters worse, there is now competition for the rights to broadcast the telecasts. Regional broadcasters along with other sporting networks trying to stay relevant. Also, the sports leagues need their cash since the regional networks are in life support.

The End of Disney?

ESPN is basically done. There is no way this entity is going to be a major player in 5 years. To start, more cord cutting is going to take place. Then we have the ability for the sports networks to go direct themselves. Why do they need ESPN to stream their games to tablets and phones when they can do it themselves?

The regional broadcasters also bring the ability to tap into the local markets, something that holds great appeal to these leagues and their owners. A few local dealers were already signed. The regional broadcasters use these to leverage higher fees from the cable operators.

This is what ESPN is now facing in terms of competition. Spread this across the country, ESPN is going to face mounting costs for the rights to these games.

Web 3.0 could also be a component to this. When coupled with artificial intelligence, it could really disrupt the industry.

Script writing and text to video software are already available. It is in the early stages but, the technology curve shows it will improve greatly over the next few years. Some are forecasting that it could be a professional quality by 2025.

We are in the attention economy. The fight is for eyeballs. Where are people spending their time?

This is a major question for Disney. There is no doubt cord cutting is going to keep going. That is going to affect ESPN.

As for the movie studios, this could get painful. The Internet changed the distribution model but not the ability of content creators. AI is about to change that.

A decade ago, Blockbuster entered bankruptcy. The decline occurred before our eyes without most of us noticing it. With Disney, we see the signs of a storm brewing. This is something that anyone who is remotely paying attention can see.

Will they be able to turn this around?

This is the multi-billion question. ESPN and streaming are going to be money drains. Can the rest of the company make up for these losses?

Losing $512 million in the most recent quarter puts into perspective the $1.5 billion deal it just signed with PENN Entertainment. That deal was over 10 years and Disney lost 1/3 that money in the last 90 days.

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