ESPN, which has been a cornerstone of Walt Disney Co.’s entertainment business, continues to suffer from a loss in pay-TV distribution. It lost another 10% to close fiscal 2021 at 76,000,000 households.
This number was included in Disney’s annual report, which was filed with SEC on Tuesday afternoon. Since the company has a fiscal year, its 2021 fiscal year officially ended in October 2.
The company’s estimate, which it said includes traditional MVPDs and most digital OTT packages, is well below ESPN’s peak of just north of 100 million homes nearly a decade ago. The ESPN number is a beacon of light, even though all linear TV networks are losing subscribers to cord-cutting and increasing tension with distributors about carriage fees.
This figure highlights one of media’s biggest problems. The ESPN and Disney executives are closely monitoring the decline in subscribers and have strengthened ESPN+ with more robust programming. The billions at stake from traditional distribution and ad revenue, however, mean a wholesale shift to streaming isn’t likely anytime soon. In October, reports that the company was considering selling ESPN or a spinoff were denied by the company.
ESPN had reached 84 millions households by the end fiscal 2020. ESPN+, the streaming service, had 17 million subscribers at the end of fiscal 2021, an increase of 66% over 2020. It has experienced significant growth since it was bundled alongside other Disney offerings. Disney earlier this week announced that it will include Disney+ and ESPN+ to Hulu’s live TV package in December. This will instantly increase their subscriber base. Hulu + Live TV has approximately 4 million subscribers and is one of the most popular pay-TV operators in America.
Other networks within the ESPN portfolio are also experiencing decline. ESPNU, which broadcasts college sports, dropped from 62 millions homes in fiscal 2020 down to 51 million this past season. ESPN News, which was also at 62 millions a year ago, dropped to 59 mil in fiscal 2021. ESPN had announced that it would be closing down ESPN Classic beginning January 1, 2022, earlier in the fall. The network was in long-term decline after its business model was disrupted by social media and the internet.
In the filing, Disney reiterated its long-held goal of increasing spending on programming and stated that it would record overall expenditure of $2.5 billion. “as much as”Fiscal 2022: $33 billion This is a 32% jump from the $25 Billion in fiscal 2021. It’s roughly equal to original programming and sports rights.
Next year’s uptick “is driven by higher spend to support our DTC expansion and generally assumes no significant disruptions to production due to Covid-19,”According to the report. According to the filing, $10.3 Billion is reserved for sports programming out of $33 billion. This includes all Disney Studios and networks, and a target of 140 scripted or unscripted series. Recent expenditures by the company have included substantial amounts for rights to college football, the NHL, and the NFL.
A notable disclosure is that Disney also claimed it made $186 million from its investment in streaming service FuboTV. Fubo was established in 2015 and saw subscriber gains. However, some investors were skeptical. Disney was one of several traditional media companies to invest in Fubo long before Hulu took control and launched its live TV services.