What Bob Iger Envisions for ESPN
I realized this weekend precisely what Bob Iger envisions for ESPN.
Oddly enough, the Super Bowl broadcast was what gave me insight into Iger’s plan to reinvent live sports consumption.
Please allow me to explain what I think Disney’s CEO has in mind for the future of ESPN.
Admit It. You Watched the Super Bowl.
Disney technically had nothing to do with this year’s Super Bowl, although Pat Mahomes and his family did visit Disneyland.
Instead, CBS and Paramount Plus broadcast the game on network television and streaming.
Thanks to a clever bit of strategy, other Paramount-owned channels got into the fun.
Frankly, you’ve never had a penalty explained the right way until Dora the Explorer did it:
Dora the Explorer explaining a false start: "Where are we going?"
*clap *clap *clap
Boots: "Back 5 yards!"@Nickelodeon pic.twitter.com/XM076d8AOd
— CBS Sports (@CBSSports) February 12, 2024
From this moment forward, I plan to clap my hands and say, “Back five yards!” whenever anyone commits a penalty.
Dora appeared as part of the Nickelodeon broadcast, which might have been the most fun moment of Nate Burleson’s pro career.
.@nateburleson wanted to get a better view. So, he took a ride on the blimp.@Nickelodeon pic.twitter.com/MXN6AAp7sB
— CBS Sports (@CBSSports) February 12, 2024
Paramount blanketed coverage via Nickelodeon, CBS, and Paramount Plus. Then, Taylor Swift did the rest.
Ultimately, Super Bowl LVIII became the most-watched televised program since the moon landing.
While estimates vary, the accepted viewing total is 123.4 million people checking out the Super Bowl via conventional means.
Once we include international viewers and streaming, some estimates reach 200 million.
We’ll never really know for sure, but there’s a truth hidden beneath this data.
Live sports programming has never been more popular than it is today.
I say this with confidence because I used to cover Nielsen ratings on broadcast and cable television.
This business has been in steady decline for more than a decade now.
For the Super Bowl to earn this many viewers in 2024 is akin to running a three-minute mile while you’re lugging 50-pound dumbbells.
The Facts about Live Sports
No other planned live televised event could claim this much attention, and I’ve got data to support this assertion.
According to CNN, “93 of the 100 most-watched programs on television belonged to the NFL” in 2023.
Only two other broadcast events were even competitive in scale to the NFL.
One was the State of the Union Address, and the other was the Academy Awards.
Those two programs drew 27.3 million and 18.7 million viewers, respectively.
In combination, they claimed roughly one-third of the viewers as the Super Bowl.
ESPN benefits from consumers’ adoration for the NFL, as well as college football, baseball, hockey, and NBA/college basketball.
That adoration comes at a high cost, though. NFL Commissioner Roger Goodell understands the value of his product.
When Goodell negotiates new broadcasting/streaming deals for NFL games, he’ll expect compensation commensurate with these ratings.
For ESPN and its corporate owner, The Walt Disney Company, that’s a game of cost escalation that’s impossible to win.
Thankfully, Disney CEO Bob Iger understands how to game the system.
His strategy comes in three forms. Let’s quickly discuss them.
Befriending the Leagues
During its most recent earnings call, Disney chose not to provide more insight into a proposed deal with the NFL.
Still, we know from reports that the NFL would like to become an equity partner in ESPN similar to how Disney just bought into Epic Games.
The goal here is simple. The NFL’s media division has historically underachieved, with NFL+ not even bothering to reveal subscriber numbers.
Let’s just say that they would if the numbers were good. I happen to be a subscriber because I’m one of those freaks who watches All-22 film.
Even so, I’m acutely aware of the struggles of the NFL Network and NFL+.
Oddly, cable carriers can push around the NFL Network, which is only available in 51.5 million households.
Even at its greatest market penetration, the service never reached 72 million households.
Contrast that to ESPN, which claims by far the highest carriage fees and has dropped to 72.3 million households.
ESPN at its worst bests the NFL Network’s strongest performance, which occurred nine long years ago.
In short, the NFL needs ESPN to join forces with NFL Media.
Conversely, ESPN needs the NFL as an investor to protect against the doomsday scenario of losing broadcast rights.
If Disney/ESPN were simply bidding, a competitor could beat them, as happened last year with Google and NFL Sunday Ticket.
With the NFL owning a portion of ESPN, the parties would both have skin in the game to keep NFL games on ESPN.
This same logic applies to other leagues as well, particularly the NBA, which conveniently is about to open bidding for its next set of broadcast rights.
Finding Someone Else to Split the Bill
Still, even if/when the NFL becomes an equity partner in ESPN, it cannot overlook substantially better deals.
Google reportedly won the NFL Sunday Ticket rights with a bid several hundred million dollars higher than the nearest competitor.
Disney simply cannot compete with tech companies like Amazon, Apple, and Google in bidding wars.
However, the one thing Disney can do is find business partners for these negotiations.
ESPN could share the cost of live sports broadcasts while also sharing the streaming rights.
With this approach, ESPN could cede some exclusivity in exchange for maintaining access. And access is the whole game here.
Thus, Disney is negotiating with the NFL, the NBA, and other sports leagues. But that’s not all.
As we’ve reported, Disney has spoken to companies like Amazon and Verizon about ESPN ownership stakes.
The idea here is that Disney cannot afford to license everything on its own.
With a few of the other right partners, anything is possible, though.
Remarkably, this line of thinking opened up another previously unimaginable opportunity as well.
Comcast felt the need to speak up and say that it had no interest in partnering with Disney.
They probably felt smug about themselves at the time, but that unforced error almost immediately came back to bite Comcast.
Disney recently announced a new partnership with Fox and Warner Bros. Discovery for a kind of Sports Hulu.
Comcast, which cannot get anybody to watch Peacock and is bleeding money because of it, got left out in the cold.
Disney has zero interest in wasting time with anybody who refuses to see the big picture.
The future involves collaboration…and vision.
The Hidden Benefits of Fortnite
Imagine watching the Super Bowl…with millions of your closest friends…inside Fortnite.
This idea is nowhere near as far-fetched as you might instinctively believe.
Fortnite has already aired concerts and major live events within the game.
All the game would need to bring this idea to life is rights to the Super Bowl and a few infrastructural additions.
Now that Disney is creating a Fortnite-adjacent universe, what’s to stop one island from being ESPN…with live sports?
All Disney would need to make that happen is the licensing rights and the agreement of content partners.
Theoretically, this premise is similar to Spongebob Squarepants and Patrick calling the Super Bowl.
What Bob Iger Envisions for ESPN
What does that have to do with Bob Iger’s plans for ESPN?
Live sports represent the primary ways to gain millions of people who are “captured audiences.”
They’re gonna watch the game no matter what. So, you can sell your wares to them during the commercial breaks.
Disney’s media empire has always run this way, with ABC and ESPN funneling guests to the theme parks and movies.
As I detailed in Disney Headlines, Iger doesn’t care about video games, but Fortnite having 100 million players in a month gets his attention.
Disney has spoken with Verizon and other cellular carriers for a similar reason.
Verizon claims just under 145 million subscribers, while T-Mobile lists around 120 million.
AT&T leads the industry with 241 million, but all these numbers share a commonality.
They’re in the same ballpark as the Super Bowl, as is Fortnite’s November user base of 100 million.
Bob Iger envisions a new ESPN level of outreach that strings together all these connective hubs with live sports as the connective tissue.
America’s current population is around 336 million.
If you take Fortnite and Verizon customers and add them together, there will absolutely be some overlap.
Still, I think it’s safe to say that Disney would have at least 150 million potential customers to market via these two partnerships alone.
Nothing is stopping Disney and ESPN from making more, either.
Bob Iger is constructing an entirely new distribution plan on the fly and thereby building a digital pathway to future success.
The key metric nobody is discussing yet is access.
With each Disney/ESPN deal, ask yourself how many new customers Disney can reach. That’s the endgame here.
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Feature Photo: (Photo by Kimberly White/Getty Images for Vanity Fair)