Disney, ESPN, and The NFL

 Earlier this month, many of us were a bit surprised to hear that ESPN announced a non-binding agreement to acquire the NFL Network including items such as the Red Zone Channel and NFL Fantasy. The NFL gets a 10% stake in ESPN (ESPN is currently owned 80% by ABC, a subsidiary of Disney and 20% by Hearst).

This announcement comes shortly before the launch of Disney’s Direct to Consumer service which has been long awaited.

Some of you may be surprised to learn that the NFL network has been around for 22 years. Recently, it has been considered by many media analysts as a failing property that never really lived up to its original potential. ESPN, once a powerhouse in cable and in advertising revenue, has been slipping the last few years as well. Young people embraced smaller sports outlets with edgier commentary, and the rights fees became so high for some sports properties that they laid off many long-term employees in a cost cutting measure. Also, ESPN is a legacy media property in a world that is largely digital these days. 

Some see positives in that NFL Fantasy Football will merge with ESPN Fantasy Football. ESPN platforms will license an additional three NFL games that will air on the NFL network. The NFL will hold on to NFL Films and other platforms as well as the official sites for the 32 league teams. 

Okay, a lot of issues come up with this deal. Many need to be clarified but there are some questions  and observations that have come up to me and some friends:

1) Is ESPN now locked into Monday Night Football forever? Will they stay in the Super Bowl Rotation (ABC/ESPN)?

2) A few years ago, some clever Wall Street analysts thought that Apple or Amazon or even Microsoft would be smart to buy all of Disney, not just ESPN. One colorful analyst said that Apple buying Disney was a no brainer. Will Disney ever go on the block?

3) In recent years, Apple and Amazon have invaded streaming video with some excellent programming. Netflix, a strong financial performer and to date the winner in the streaming race, also got their feet wet with a slight introduction to football. The opinion of some, including me, was that if they wanted to get into sports, particularly football, they could bid up the cost of rights to the NFL and could snatch some games from the legacy media players. 

4) Also, a contender might have been Google with their popular You Tube platform. Again, they had the resources to pay up for a football package that few companies other than those referred to in item #3 could match.

5) The NFL would have to thread the needle on deals so there would not be complaints if ESPN received sweet deals relative to others who wanted the rights to the games.

6) Finally, when groups merge, there are likely to be layoffs in certain areas. For example, with the two fantasy football products reduced to one, staff reductions seem a certainty. Also, commentators and announcers will be reduced. Both ESPN and the NFL need to proceed carefully as many on air people have a significant following.

For decades, people have always referred to the Big Four in sports broadcasting—the NFL, Major League Baseball, the NBA and the NHL. In recent years, there has been no contest. The NFL is the dominant force among them. 

How this will all shake out is not clear at this point. 

It will be interesting for sure.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.