Two years ago, ESPN spent $125M for a new Sport Center set. It's hard to believe they would have spent that money, for a show that many of us no longer watch, had they foreseen a large fee drop.

This article says that not only have they lost ~ $650M in subscriber fees but because there are fewer subscribers, they lost ~$250-$300M in ad revenue, since 2013.

The article wonders where the bottom (fees and advertisement revenues) lies.
What happens if ESPN receives revenue that are 25, 40 or 50% less than in 2013?

One thing that will happen is that ESPN will stop overbidding for new contracts - both pro and collegiate. Since live sporting events are its mainstay, they will continue to bid on everything in sight, but will reserve its aggressiveness for the big pro and collegiate packages.

Next year's bidding for the BIG contract will indicate ESPN's business model for every other contract renewal bid of its collegiate portfolio.

We should no longer expect that the revenues from those new contracts will be substantially higher than the old ones.


http://us11.campaign-archive1.com/?u=886b833e7ee9981fff7354cd9&id=b60494b216