Warning: There could come a day in which you are forced to pay for episodes of ESPN's "SportsNation" just like you fork over money for "Game of Thrones" today.
Disney CEO Bob Iger said Tuesday that people may one day have to buy ESPN content directly from the network or cable company, similar to how HBO fans purchase that programming now.
“I think eventually ESPN becomes a business that is sold directly to the consumers,” Iger told CNBC's "Squawk Box" on Monday.
In recent months, Disney has forced serious cost-cutting moves on ESPN. According to the Hollywood Reporter, Disney ordered ESPN to cut $100 million from next year's budget and $250 million in 2017. High-priced talents like Bill Simmons, Keith Olbermann and Colin Cowherd have also been pushed out in recent months.
Within the past year alone, ESPN has lost 3.2 million subscribers. Iger cited the rise of these "cord-cutters," as they're known, as well as the decline of bundled television packages, as part of the reasons he sees ESPN pursuing a direct-to-consumer business model in the future.
Disney CEO Bob Iger foresees big changes in how ESPN is sold to viewers.
But don't freak out quite yet. Iger says he doesn't expect such a change to happen within the next five years. "If we end up seeing more erosion in the so-called multichannel [cable and satellite TV] bundle, quality will win out," he said.
Disney, which owns ABC and ESPN, currently has cable companies pay the "worldwide leader in sports" a $6.10 fee per subscriber, which makes it the most expensive network on television by a significant margin.
As such, analysts have suggested that if ESPN began to sell its content directly to customers, it would have to charge over $30 a month per customer to make the same money it does from the current television distribution model.
But that exact price would depend on how many current subscribers ESPN could retain in an "a la carte" television pricing environment. So if only 20 percent of its current customers subscribe, ESPN would have to charge $33 monthly to maintain current revenues, according to Nomura Securities analyst Anthony DiClemente. But if 40 percent did, that price falls to $16.
Either might be a hard sell to the network's current base. The perceived value of ESPN to viewers is only $1.45 a month, according to Beta Research.
Convincing consumers to pay over 12 times that amount would take a shift in attitude, but given the legions of sports fans who watch ESPN products like Monday Night Football, NBA, MLB, NCAA basketball and the college football playoffs, Iger is confident that conversion won't be a major issue.
"While the business model may face challenges over the next few years, long-term for ESPN ... they'll be fine," he said.
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