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Why ESPN Isn’t Concerned about Falling Sports Ratings

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Dec. 4 2020, Updated 10:52 a.m. ET

Launch of the ACC Network

The Walt Disney Company’s (DIS) launch of the SEC Network in 2014 has proved to be a resounding success for the company. The SEC Network is a joint venture between Disney and Hearst Corporation that broadcast mainly college sports, centering on the Southeastern Conference.

In August 2019, Disney is set to launch another television network focused on college sports, the ACC (Atlantic Coast Conference) Network.

During the Citi 2017 Internet, Media & Telecommunications Conference, held in January 2017, Disney was asked about the launch of the ACC Network. Disney stated that according to its estimates, it believes that there are ~200 million college sports fans in the US.

The company added that around 3 million ACC alumni are located in major metropolitan markets, including New York City, Boston, and Atlanta. Considering these statistics, Disney expects the ACC Network to have a successful launch in 2019.

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Decline in sports ratings

Disney was asked at the Citi conference about the decline in sports ratings. Disney stated that it believed that the decline in sports ratings was a short-term trend and was unlikely to extend for the long term.

Time Warner (TWX) was also asked about the declining sports ratings during the company’s fiscal 2016 earnings call. Time Warner’s Turner Sports has a licensing agreement with the NBA to broadcast its games through 2025.

However, Time Warner stated that it believed that the fall in viewership for sports programming wasn’t a trend that was likely to persist. Time Warner elaborated by stating that it’s seeing strong demand from advertisers for the NBA championship and the NCAA[1. National Collegiate Athletic Association] men’s basketball championship.

In 2016, Time Warner had advertising revenues of $4.6 billion and comprised 16% of Time Warner’s total revenues of $29.3 billion, as indicated by the chart above.

Disney makes up ~0.8% of the SPDR S&P 500 Trust ETF (SPY). SPY has an exposure of 3.9% to the computers sector.

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