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CNBC’s Jim Cramer told TheStreet.com that Disney’s reorganization plan announced this week is writing on the wall for ESPN. “I think it’s really about getting rid of ESPN,” Cramer said of the plan to accelerate a direct-to-consumer strategy. The main focus for Disney going forward will be streaming, streaming and more streaming.
The focus to base the company squarely on streaming and Disney+ has terrestrial ESPN in a tough spot within a company that just announced it will shift away from traditional methods of content distribution.
“There is a belief we’re saturated in sports,” Cramer added. “That ESPN is no longer integral.”
“ESPN used to be this unbelievable thing, and now it’s just a really expensive thing they are having trouble monetizing. ESPN is no longer the precious place that it once was.”
The CNBC host claims that distribution platforms such as MLB TV and NBA TV have “bastardized” sports viewing.
OutKick reported earlier this month that ESPN is bracing for major cost cuts and possibly hundreds of layoffs.
“ESPN went from slightly over 100 million cable subscribers in 2010 to slightly over 80 million earlier this year,” OutKick’s Ryan Glasspiegel wrote this week when the Disney news was announced. This affects every cable network. Cable news has been thriving in viewership for a number of reasons, but it is still facing the subscriber declines of the rest of the industry. The issue for ESPN in particular is that they have by far the biggest subscriber fees of anyone in the business.
“This is the rough math: Between ESPN and ESPN2, the subscriber fees total about $10 a month. They’ve lost about 20 million subscribers, which is $200 million a month, which is about $2.4 billion a year in lost revenue.”