Chapek said the expectations for ESPN+ have been exceeded on a monthly basisGETTY IMAGES
Disney’s reorganization of its media and entertainment businesses comes as an effort to “accelerate its direct-to-consumer strategy in light of the success of Disney+,” according to CNBC’s Julia Boorstin. The “move divides content creation and distribution by creating a new media and entertainment distribution group” which will be “responsible for monetizing all content, including ad sales and how all content is released.” Disney CEO Bob Chapek said the company’s expectations” for Disney+ and ESPN+ “have been exceeded, and exceeded every month.” He said, “We’re thrilled with the way it’s going, and we just think that this reorganization is going to catalyze growth even further.” Chapek did not call this a response to the ongoing pandemic, but said that may have “accelerated the rate at which we made this transition.” Chapek: “This transition was going to happen anyway. ... This is looking out with a vision towards where we see the world going and how we see that consumers are interacting with Disney+, ESPN+ and Hulu, and where it’s going to go in the future.”
MOVING FROM TV TO PLUS? Boorstin wondered whether that means Disney is “going to be trying to remove more of those sports rights deals over to ESPN+ from TV as those deals start to expire in coming years?” Chapek: “Short of announcing anything specifically, we really like the direct-to-consumer model that we’ve got. But at the same time we’ve got relationships, we’ve got tremendous cash flows that are generated from our traditional legacy media businesses, so we’re not just going to walk away from those. I guess you could say we’re sort of tilting the balance towards direct-to-consumer across all of our businesses, whether it be sports or whether it be traditional movie platforms or our own television stations” (“Closing Bell,” CNBC, 10/12).
IMPACT ON ESPN: The moves do not mean much for sports -- at least not yet. ESPN cannot move its games from linear TV to ESPN+ unless it has a contract that specifically allows for such a swap. Most rights deals have specific language about where ESPN can carry games. Many insiders point to sports and live news as the two genres helping to hold the pay-TV business together, so any change to ESPN’s programming schedule will cause angst throughout the cable community. However, it is clear that Disney sees streaming as the future for ESPN, too. ESPN President Jimmy Pitaro will continue to head up the sports unit, one of three content groups alongside studios and general entertainment. Pitaro, who gains a new title as chair of ESPN & Sports Content, will continue to report to Chapek (John Ourand, SBJ Media).
