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Update - That didn’t last long. CNBC posted an interview with Iger where they asked him directly about ABC as a possible sell off, and Iger made it clear he likes the content but the model for that (along with FX, ESPN and Nat Geo) broadcast is no longer profitable. The debate inside the “walls… is whether they will sell the platforms and keep some content and move it to Hulu or just divest it all into the sale. Nat Geo fired all of its internal writers a week or so ago and are now just paying for independent contributors to write articles. When asked about AI, Bob was willing to concede that it is on the table as a path to profitability. Still, take a look below at some suggestions from the past week that were ballooned.
Let’s start with the good news. Disney has suggested a partnership with ESPN and ABC insofar that some exclusive content could be aired on the public network. At its highest level of relevance, it would mean that you could watch ESPN content on local television. This is still a balloon, but it’s the first really good idea I’ve heard in a while. The stat announced was that cable subscriptions went from roughly 100 million to 60 million over the past couple years. With the estimated population of the U.S. at 336 million (down from 400 just about 6 years ago) that would mean that cable went from being in 1 out of every 3 homes to 1 out of every 5 homes. With the glut of inexpensive “digital antennas… available this could bring viewers back in and advertisers could have another venue. If I’m a top accountant at ESPN (or Disney) I would rush this deal to the front office and leak it to every available outlet.
That said, I know I’ve had some strange write ups this summer. Artificial Intelligence, Disney Shareholder meetings, viewership metrics etc. The search for answers to player escrow led to some unpleasant rabbit holes. Most (or many) of you know that the modern business model isn’t based on cash, it’s based on lines of credit. And so, as long as there’s credit there’s no problem. We have a problem.
ESPN has had 3 rounds of layoffs totaling about 395 people this year. Only 20 or so of the names have ever been widely published because they were on air talent. The last set of layoffs were high dollar assets as ESPN is at a point where they can’t make many more “behind the scenes… cuts. Someone has to run the show. Usually at least 6-10 people (cameras, producers, makeup etc). Before this ABC idea was floated ESPN floated going to full streaming with a high end package costing $33 per month and fewer features around $20. Disney Plus is still reporting billion dollar losses quarterly, and the box office releases look to add up to 1.2 billion for the past fiscal year. But, how does this affect hockey?
ESPN is considered 1 of the 3 tiers of Disney and all 3 are down in revenue (parks, movies/streaming, ESPN). The company has to buy Hulu for at least 9 billion (as high as 23 billion) in about 7 months. Their largest line of credit came through a company that was the highest individual share holder, until recently. They began to sell off shares and refuse lines of credit until profitability or at least stabilization was made. When I posted the article from the Associated Press that they had signed on with an AI provider a day after the actors joined the writers on strike, it just didn’t land. The AP gives news to news outlets. Photos, quotes, crews on the ground, many newsrooms don’t even send out their own people. They get the AP broadcast and air it. Then, the AP said it has been using AI for years on sports reporting and other projects. That was the shock. In an interview, the news organization just said it like it was standard procedure. The top 3 demands of both writers and actors include “no AI… for actors and “limited AI… for writers.
Then a studio head said, “we’ll let them strike until they lose their homes, apartments and cars…. Then Ron Pearlman did a video and outed the source by divulging their income. That studio head is now being identified as Bob Iger, head of Disney. Ron took down the video, but you can find it. It’s not pleasant.
Of the “major… American sports, hockey is the low end. As ESPN continues to jettison employees, non performing IPs are next. You know the numbers. I’ve given them several times. The ratings for the NHL broke 2 million during the finals, which is the average weekly rating for the NBA. The NBA broke 13 million during the finals, which is 5 million less than Sunday night football. At between 700k and 800k, the NFL sees the equivalent of 24-30 NHL games in 2 days with 28 million views between Sunday and Monday. Nearly 450 million views in 16 weeks. That’s roughly the equivalent of 640 NHL games, or just under 8 teams 82 game seasons of NHL viewership. With 16 games played. Is it sinking in?
This season needs to see a significant bump in viewership, which means a significant bump in subscribers who pay the cable and streaming rates without VPN (which costs a fraction of the others). The entertainment consumption in theatres is being compared to 1974 numbers, while Netflix, Amazon and Disney have all just paid 13 million for Korean content. That’s the loophole and for whatever reason, shows like “Squid Games… are insanely popular. I care because I’ve already lived through companies closing. I was making photo chemicals shortly before Kodak demolished 300 buildings. I watched owners lose everything, as employees went and found what jobs they could. Some who had been there 30 years.
Nothing lasts forever, and the spending on entertainment is way down. Getting the game back to network TV may help solve some of these issues. Somewhere, someone is making 27 million per year to make these kind of decisions. Let’s hope they’re a hockey fan.