Disney...Thoughts on where they may be going | The Boneyard

Disney...Thoughts on where they may be going

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ESPN and Sports Betting...a paradigm shift

Walt Disney Co.'s ESPN is seeking to license its brand to major sports bettingcompanies for at least $3 billion over several years, according to people familiar with the matter, aiming to capitalize on the fast-growing online gambling industry.

The sports-media giant has held talks with players that own major sportsbooks, including casino operator Caesars Entertainment Inc. and online gambling company DraftKings Inc., the people said. ESPN has existing marketing partnerships with both companies.

On offer is the right for a suitor to use the ESPN name for branding purposes and potentially rename its sportsbook after the leading sports TV network in the U.S., the people said. A deal could come with an exclusive marketing commitment that would require the sports-betting firm to spend a certain amount of money advertising on ESPN’s platforms, one of the people said.


I find the Disney-ESPN plunge into sports betting to be a paradigm change for the company (Disney). Disney now has a 6% share of Draft Kings. Sports betting has become more integrated into all sports, including college football, and one can assume that to control it, you have to have a vested financial interest.

ESPN and Change in Distribution Strategy

I find it interesting that there has been no recent news about the potential redirection of ESPN’s distribution strategy as they segue from the carriage agreements with cable and satellite to a pure streaming service. They had an extremely successful rollout of Disney+.

ESPN+ was, and is, an experiment in streaming. But ESPN put bumpers around it. It had its own inventory of sports to cover (soccer, etc.) but - you can’t buy it unless you already pay for regular ESPN via cable or streaming, etc., - and - it does not telecast any sports that can be found on “regular” ESPN on any linear channel.

ESPN+ often gets confused with ESPN3 which is really a dumping ground of inventory that is not good enough to be broadcast on “regular“ ESPN channels. And it is confusing to use sometimes, because there is even more “lower desired” inventory that ESPN sells to regional third party channels.

And if there is a regional channel in your area that has bought the rights to a game, and you live in that area that has bought those rights, and you don’t have that channel, You are screwed.

I have been saying since ESPN got the CBS Game of the Week that ESPN flat out does not have the bandwidth in its linear channels to handle all its inventory.

The splicing and dicing into separate conference channels, regional third party channels, and ESPN+ (whichhas televised a lot of AAC games and some Big 12 games) Is a mess.

Is tiering the teams into Tier 1 and Tier 2 and others the answer? It already happens and ESPN expresses its tiers through this very clunky distribution system. In the accounting world, one might say that ESPN is experiencing revenue leakage because it cannot maximize the value of its assets in its distribution channels.

Streaming

What if ESPN eventually goes all streaming? Isn’t that a material change to every conference contract which is based on linear channels? The basic foundation of the three conference channels (B10, SEC, ACC) is that they must be linear channels in the ESPN ”block” of channels. If ESPN goes “all streaming”, it will do it because it will make more money and that how Americans access programming will have shifted.

History. In 1962, a movie was made with original songs written by a singer who also provided the voice for some of the songs. The movie was a hit. Twenty five years later, the movie was re-issued in DVD. It made more money. The singer wanted to be paid more royalties. The Company said no, since the contract did not provide for royalties in anything other than the format in the original film. The singer asserted that she had to be paid in all formats, even in formats that did not exist at the time that the contract was signed.

Peggy Lee won. The movie was Lady and the Tramp. And the company that lost was Disney. And I believe that is the reason why ESPN+ does NOT carry games that are on the regular ESPN channels. It would create a new revenue stream for a game that is covered by an existing channel.

Changes will be coming as Disney, over time, migrates from linear platforms to streaming...

And I think that it will not take until the ACC GOR times out in 2035.
 
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