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Why Disney Still Believes ESPN Is on a Winning Path

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Dec. 4 2020, Updated 10:42 a.m. ET

Disney’s ESPN

The Walt Disney Company’s (DIS) ESPN has some Disney investors worried, given the fall in subscribers. However, Disney believes that there’s nothing to worry about because live sports will continue to attract viewers for a long time—and it’s still a lucrative revenue stream for the company.

In a bid to attract viewers who prefer to watch content online, Disney has also licensed ESPN to a rising number of online television and streaming services including Dish Network’s (DISH) Sling TV, Hulu, Alphabet’s (GOOG) YouTube TV, and AT&T’s (T) DIRECTV Now.

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Disney fourth in the ratings game

According to a Multichannel News report from May 23 citing Nielsen data, Disney’s ESPN finished fourth in primetime ratings for the week May 15–May 21 with 1.7 million viewers. Time Warner’s (TWX) TNT network topped the ratings race that week with 3.1 million viewers on average.

According to the report, from May 15 to May 21, the majority of viewers watched the NBA (National Basketball Association) playoffs. Disney stated at the MoffettNathanson Media & Communications Summit earlier this month that its broadcast of MLB (Major League Baseball) was also getting good ratings.

Disney has meanwhile pointed out that in calendar 1Q17, its ESPN audience rose 15% YoY (year-over-year), and including viewership for WatchESPN and out-of-home viewing, total viewership for ESPN rose 25% YoY.

As the chart above shows, the number of Disney’s ESPN subscribers continued to fall, dropping from 99 million subscribers in 2013 to 90 million subscribers in 2016.

Disney makes up 0.7% of the SPDR S&P 500 ETF (SPY). SPY has 4.3% of its total holdings in the computer sector.

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