Rich Greenfield, BTIG media and tech analyst, is extremely concerned about ESPN‘s future. He points out that ESPN doesn’t own much of its content other than SportsCenter. Greenfield has a “sell” recommendation on Disney and has one of the lowest price targets for the stock at $US90. Below is a transcript of the video.
Sara Silverstein: … And speaking of ESPN. I always looked at that as how they’re going to hold on to the cable package — to the traditional bundle. And it feels like it’s becoming a real weak point for Disney.
Richard Greenfield: Look you listen to like an investor conference call, like an earnings call for Disney, and virtually every question is on ESPN. I mean, people are actually apologizing like, “I have another ESPN question.” Because it’s the question that just doesn’t go away. And the problem is that ESPN doesn’t own its content. You know, you’re going to shoot this video, Business Insider’s going to own this content. You actually own and control it, and can monetise it however you want to. The problem with ESPN is that they’re are renter of content. They actually don’t … the biggest content they own actually themselves is SportsCenter, which is really been devalued in a world where, you know, turn on Twitter and you’ve got sports scores coming out of your ears. So the content that ESPN has, the stuff that’s really high profile — they rent. And the problem with renting is all of these people with deep pockets that we were just talking about what stops — it’s not so crazy to think of an Apple or an Amazon taking over Monday Night Football in 2022.
Silverstein: Absolutely not, it makes perfect sense.
Greenfield: If you want to take the highest-profile — if you want to destabilize the whole ecosystem, literally shatter the traditional media ecosystem. The best way to do it would be to get football. Because football, to your point on ESPN, sports is what’s holding the whole linear bundle together. You attack sports and this whole thing shatters. And so I don’t think it’s crazy at all. And so ESPN has falling subscribers, but remember they have locked in their costs. So they pay the NFL more every single year, they pay the NBA more every year, they pay all these sports write — keep escalating. They have got lower viewership because less people are watching linear TV, especially things like SportsCenter. And they have got fewer subscribers, because cable subscribers, probably a lot of the people as I look around your office, given their demographics, are probably unlikely to be subscribers. You know, I think the younger generation is just not signing up for cable. And even, even older generations are looking at it going, what am I paying $US120 a year for? When, you know, I mean, like what’s to watch right now on network television? You know, it’s the summer you’re probably watching Netflix or Amazon. Like why are you subscribing to linear television? And I think it’s leading to an acceleration of cord-cutting that ESPN has no answer for.
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