Disney will get one MLB game a night to "stream on its new ESPN-branded streaming service," according to a source cited by Craig Calcaterra of NBCSPORTS.com. The game will be "behind a pay wall." In exchange, Disney will pay MLB a "'significant' sum, over and above what it already pays MLB for ESPN’s broadcast rights" and over and above the $1.58B Disney paid for the additional 42% of BAMTech it acquired. The exact figures were not disclosed. The game will "not be exclusive," meaning that fans of the local teams involved will still get the exclusive TV broadcast on their RSN and out-of-market MLB.tv subscribers will "still get the game as well." Calcaterra wrote it "would appear that the point of the extra game a night is to give ESPN some reliable, daily actual sports content for its new platform" (NBCSPORTS.com, 8/9).
INDUSTRY MOVER: In N.Y., Brooks Barnes reports Disney’s decision to "better align itself with consumer trends," including plans for two online subscription streaming services, instantly "reverberated through the entertainment industry." Disney's ESPN streaming service will debut next year, followed by a branded OTT service in '19. Disney’s cable channels have "long been seen as the reason many viewers were refraining from cutting the cord entirely." If Disney was "going all in on streaming, the impact would be felt by almost every television company and cable operator." Cowen & Co. analyst Doug Creutz in a research report "summed up Disney's streaming plans, especially for movies and television, as 'aggressively' pushing 'the traditional content business into terra incognita.'" Disney’s shares declined by more than 4% yesterday to $102.83, "underscoring the uncertainty." Barnes notes Disney investors may also be "worried about the enormous spending it will take to build two streaming services." Some might have been "underwhelmed by the company’s plans or might have thought that the decision came much too late." While a few "ardent Disney critics held that view, most analysts applauded the company’s move." Disney Chair & CEO Bob Iger has also "made an important calculation that Disney -- unlike most of its competitors -- has programming that is must-have in the old model (cable and satellite) and in the new (streaming)." Disney has the "power to introduce streaming offerings around ESPN, Pixar films and Disney Channel shows without worrying about being dropped by third-party distributors, including upstarts like Sling TV and PlayStation Vue" (N.Y. TIMES, 8/10).
WHAT THEY'RE SAYING: The N.Y. POST reports Disney’s shares fell yesterday as Wall Street "doubted" whether the company can "succeed with a plan to ditch its relationship with Netflix as it launches its own streaming services." RBC Capital Markets analysts wrote, "This may initially create angst with investors as Disney gives up a ‘bird in the hand’ from Netflix, invests in BAMTech, content and probably accelerates pay TV subscriber declines." Some analysts said that though the cost of the move will "hurt the company’s profit in the near term, the strength of the company’s content may help it succeed in the long run." Evercore analysts wrote, “With best in class copyrights and brands, and with IP rights to a plethora of sports content, it seems management has decided to play offense" (N.Y. POST, 8/10). Investment banking firm SunTrust Robinson Humphrey analyst Matthew Thornton said, "The consumer has to start figuring out ... I am trying to save money, but what does my new bundle look like? It can become overwhelming." USA TODAY's Mike Snider writes the "onus will be on consumers to make some hard choices in the future, so as to not overpay for programming." (USA TODAY, 8/10).
SPORTS TALK: In L.A., Stephen Battaglio writes now the question is whether the revenue generated by the new ESPN streaming service will be "enough to offset the subscriber dollars that go away every time a household decides it can do without cable." It "may take a few years for that to happen" (L.A. TIMES, 8/10). In DC, Matt Bonesteel writes the ESPN service "will be a welcome move" for some. One of the "complaints about ESPN in its current form is that too much network time is devoted to debate and not enough is spent on actual sporting events." But any cord-cutter who "expects a full-fledged ESPN replacement is bound to be left wanting, at least at the outset" (WASHINGTON POST, 8/10). YAHOO FINANCE's Daniel Roberts writes the ESPN service is "still not the streaming product most sports fans want from ESPN," as it will not feature primetime games that run on the net. However, users should "expect the tech to be smooth and impressive, and ESPN will test the waters there first before it will go all the way to a full OTT offering a la HBO Now" (FINANCE.YAHOO.com, 8/10).
