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Why Is the Walt Disney Company Optimistic about ESPN ?


May. 27 2016, Updated 10:06 a.m. ET

ESPN’s new initiatives

This month, The Walt Disney Company (DIS) unveiled ESPN’s programming slate and new digital content platforms at the advertising upfronts in New York. The company introduced a new product, LiveConnect, for advertisers. LiveConnect indicates the type of advertising that would connect with sports fans when they are viewing live sports by considering the fans’ emotional state.

Disney also stated that WatchESPN will now be accessible through the ESPN app on Alphabet’s (GOOG) Play Store on Android TV and Nexus Players.

Disney is trying to broaden ESPN’s reach by distributing it across multiple platforms in international and US markets. ESPN is already a part of skinny bundles such as Dish Network’s (DISH) Sling TV and Sony’s (SNE) PlayStation Vue. ESPN is now also partnering with VICE Media.

At the MoffettNathanson Media & Communications Summit this month, Disney stated that a core part of its ESPN strategy is to make the channel available on multiple platforms, including “digital mobile” and skinny bundles.

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ESPN’s strategy to drive up its long-term value

At the MoffettNathanson conference, Disney stated that it has always believed in the long-term value of the ESPN brand. Disney believes that sports programming, whether it be live or sports news and highlights, will always be extremely popular and a “strong demographic” for advertisers. However, as the above chart indicates, ESPN has been steadily losing subscribers. The number of subscribers for ESPN fell from around 99 million in 2013 to 92 million in 2015.

In a bid to gain subscribers and strengthen ESPN’s “competitive position in the marketplace,” Disney is making ESPN available on multiple platforms and investing in ESPN’s sports content. It is licensing major sports events for a long period and partnering with media platforms such as VICE.

Disney makes up 0.83% of the SPDR S&P 500 ETF (SPY). SPY has a 3.5% exposure to the computer sector.


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