ESPN announces deal with Sirius XM
On August 29, 2017, The Walt Disney Company’s (DIS) ESPN announced that ESPN and Sirius XM (SIRI) had launched ESPNU Radio. ESPNU Radio, which debuted on August 31, covers college sports and is available 24/7. With the launch of ESPNU Radio, ESPN has also extended its broadcast distribution agreement with SiriusXM for five years.
With the launch of ESPNU Radio, ESPN seems to be targeting college students with an interest in sports, as well as the families of college students and alumni of these colleges. ESPN is in the process of targeting Millennials, as well as viewers across different demographics, with its decision to launch ESPN’s direct-to-consumer service.
Disney expects to launch ESPN’s direct-to-consumer service in early 2018. Keeping the launch of ESPN’s direct-to-consumer service in mind, Disney has acquired control of BAMTech by increasing its stake in the company from 33% to 75% for an additional $1.6 billion. Disney has stated that such a move would give the company access to the technology to provide a high-quality experience to its viewers through ESPN’s direct-to-consumer service.
With ESPN’s direct-to-consumer service, Disney intends to offer multi-sports packages as well as individual sports packages. Its subscribers could also access the service through an enhanced version of ESPN’s current application.
Rationale behind ESPN’s digital and radio presence
ESPN is launching its direct-to-consumer service in an apparent effort to recover from the ESPN television network’s struggle to gain new subscribers. As the chart above indicates, the number of ESPN’s subscribers fell from 99 million subscribers in 2013 to 90 million subscribers in 2016.
Earlier this year, ESPN revamped its cornerstone program, SportsCenter. The network undertook further cost-cutting initiatives that included laying off 100 employees—including on-air talent—just two years after laying off about 350 employees.
In a bid to attract Millennials to the network and retain them, Disney is also increasingly distributing ESPN on skinny bundles priced at $40–$50 per month.