Earlier in this series, we looked at the importance of Amazon’s (AMZN) Prime Video service for the company. We also discussed the news that the company could be bidding for live sports broadcasting rights.
In this part of the series, we’ll take a look at how Amazon’s bid for live sports broadcasting could affect media companies such as The Walt Disney Company (DIS).
Disney’s ESPN is part of its Media Networks segment, which made up 43% of Disney’s revenue of $55.6 billion in fiscal 2016, as indicated by the chart above.
Considering the popularity of live sports, Disney’s ESPN earns a majority of its revenue from advertising during the broadcast of these events. ESPN holds the sports broadcasting rights for major sports events such as NFL (National Football League) and MLB (Major League Baseball) games.
Troubled times for Disney’s ESPN
However, in October 2016, FierceCable reported that ratings for Monday Night Football fell 24% in the NFL’s Week 5. The fall in ratings raised questions about whether viewers have been moving away from watching live sports on TV. The report also stated that NFL game viewership had fallen 10% across all cable and broadcast networks broadcasting games.
Disney’s ESPN subscribers fell from 99 million subscribers in 2013 to 90 million subscribers in 2016. Agencies such as Nielsen also continue to watch Disney’s ESPN closely for its subscriber numbers. According to a Variety report from October 2016, Nielsen withdrew the subscriber data that it had released in the week starting October 24, 2016, after it faced heavy criticism for suggesting that Disney’s ESPN could be suffering major subscriber losses.
However, Nielsen later reaffirmed its data, which indicated that ESPN had faced subscriber losses of 621,000 in a month.
Amazon’s bid for live sports could only result in adding to ESPN’s woes.