It has now been over a week since all Disney owned channels went dark on Spectrum cable TV. This has left Spectrum customers without many popular channels, including ESPN. This has also left Disney without access to revenue from Spectrum’s over 14 million TV customers.
Disney has already been cutting costs at ESPN, including laying off ESPN staff. Now this raised the question of how ESPN will respond to losing billions in revenue every month ESPN is dark on Spectrum. This, according to respected analyst Rich Greenfield could force ESPN into bankruptcy if they are unable to work out a deal with Spectrum.
Update Spectrum and Disney have reached a deal to bring back some of Disney owned channels including ESPN back to Spectrum. Some Disney channels will not return to Spectrum. You can learn more HERE.
It is reported that Disney gets about $9 a month for ESPN from every cable TV customer. Now that Disney just lost 14,071,000 TV residential customers, that leaves an over $126 million hole in ESPN’s budget. This comes at a time when ESPN is already looking for ways to cut costs now, losing over $126 million could force Disney to look for new ways to raise money.
If Disney fails to reach a deal with Spectrum, this could result in over $1.4 billion in lost revenue every year for ESPN. Or about $4 million every day in lost revenue for ESPN. In total according to U.S. News, Spectrum pays Disney $2.2 billion in annual programming costs with the majority of that being for ESPN.
This loss of over $4 million a day in subscriber revenue is likely not the end of Disney’s ESPN losses. ESPN could also be facing a loss of ad revenue if Disney sees a drop in ESPN viewership we could see advertisers looking for other places to spend their ad dollars. We are already seeing advertisers spending their money in other places vs traditional TV.
So why is this news that could force ESPN into bankruptcy? Right now, ESPN has very expensive contracts for sports broadcasts for years to come. If ESPN sees a massive drop in revenue from Spectrum dropping them that could put pressure on ESPN. It is also being reported that other cable companies are watching Spectrum’s fight with Disney closely. If they are successful others could follow Spectrum’s lead in pushing back against ESPN’s high cost.
For now, we will have to wait and see what happens but clearly, 2023 could see how we watch TV forever change.