January 21st, 2016
(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: email@example.com
This proposed a problem, if a theoretical one, for ESPN: while it grew into the giant that it is today on the back of the dual revenue stream, it faced a dual threat. It faced the same threat as everybody else in the television industry, that consumers could cut the cord entirely and instead opt not to pay for TV. But it also faced a threat from the tens of millions of non-sports fans who were collectively paying enormous sums for ESPN each month just because it was included in the standard bundle, but would happily not do so if their cable provider offered a cheaper skinny bundle without it.
In early 2012, ESPN was entirely unfazed by this prospect. At a media conference, then Disney-CFO Jay Rasulo talked up ESPN’s virtues—“fans love ESPN … for 11 straight years, ESPN has been the most valued network to cable operators”—and dismissed the possibility that distributors would offer attractive skinny bundles without the four-letter network:
I think they’ll continue to use them in a narrow way that fits their own business strategy for markets that they’re either going to have zero subscribers, they’re going to get on some skinnied-down package. But I can’t imagine that any of them are going to want to move their business model towards a series of skinnied-down packages. It doesn’t make sense economically for them and the response to these skinnied-down packages has been historically extremely limited.