Diary of a Sports Cord Cutter: Carnage and Opportunity

By Brad Hubbard | @bradhubbard | 5.23.2017


It’s what they call in Washington a ‘True Fact’ that cord cutting is affecting the sports world in a major way. North America’s biggest sport rights holder, ESPN, is front and center in this battle of the cord cutting and the traditional way things have been done.  Subscribers are fleeing at a rapid rate (down 12% since 2010) and ESPN along with the sports leagues are trying to figure out how to stop the bleeding or profit from the change. While the traditional powers are nervous, small leagues and up and coming sports are rejoicing.

ESPN has spent billions on sports rights between the NFL, NBA, MLB, college football and others. To give you an idea of how much they do spend a year, they spend over a billion dollars on the NFL alone and they only get one game a week! With the old cable and satellite model being blown up, the network and the leagues are looking at every option available to them which is partially why ESPN’s parent company, Disney, bought into MLB Advanced Media last summer.

The NFL, MLB, MLS, PGA and NBA are already reaching out in different ways to get their live programing to their fans. Whether it is the NFL cutting a deal with Amazon or MLB and MLS signing deals with Facebook, the sports leagues are already preparing for the day when they see a decrease in the value of their sports rights. Gone are the days of multi-billion dollar deals for the exclusive right to show a sport. In the near future the leagues and big time college conferences will have to spread the costs among several outlets.

ESPN is approaching this transition a little discombobulated. The fact is that live streaming on platforms like Amazon, Facebook and Twitter will not replace the loss of dollars from the traditional cable/satellite/TV world. However, these new platforms are a life saver to niche or relatively new entities like eSports, MMA and others.

ESports were born online and are thriving on platforms like Twitch, YouTube and even Facebook. These OTT platforms are also paying a whole lot less for the sports rights than ESPN, NBCSports and Fox Sports are paying for traditional sports like the NFL and NBA. These new platforms also provide these niche or newer sports the right demographic and a ton of exposure.

What does this mean? A lot more exposure for League or Legends, Overwatch and even the UFC if they play their cards right.

Remember, these niche and newer sports and starting from scratch in a way. An mid eight figure deal for an eSports league or new MMA organization is a windfall for them. The same can be said for a non-power five conference like the Mountain West who floated the idea earlier this year of going to straight OTT model.

The fact is that Disney, Comcast, and Fox are unlikely to retract the amount of cable outlets they have. And if they are unwilling to play these huge amounts for the rights to the NFL, NBA and others then they’ll have to fill the hours on their networks somehow. That could give newer, cheaper sports entities like Riot Games League or Legends or the UFC an opportunity to swoop in provide quality content that pull desirable demos for a reasonable price.

The winds of change are upon the sports networks and leagues. You are already seeing layoffs because of these changes and you are going to see more. But these changes are inevitable and disrupting but not the end all be all. Opportunity does exist for the traditional sports networks and leagues but the have to accept the fact their options may not be as beneficial to them as things were in the past. For the newcomers, get ready for a windfall of money and a lot more exposure. Here’s to hoping that you know how to scale.

BAM is for Billions

By Brad Hubbard | @bradhubbard


BAMIt wasn’t a secret that Disney was looking to take a stake in MLBAM (BAM) but the end number may surprise some folks. According to Bloomberg Disney is buying 33% of BAM for $3.5 billion with an option to buy more in a few years. That is a valuation of over $10 billion. Not bad for an entity that doesn’t even turn a profit yet.

A few years ago Fast Company did a profile on BAM and within that article there was an estimated IPO price for BAM in 2005. That number was $2.5 billion so the company has essentially increased around $8 billion over the last 11 years. If you did some loose math based on that article you could see that BAM was more or less breaking even.

That’s not to say that MLBAM isn’t worth a $10 billion valuation. They are a white label solution as their CEO Bob Bowman would say. They are the streaming backend for MLB, WWE, NHL, Watch ESPN and have even done the Super Bowl. They made bets that paid off and with this purchase by Disney, it puts them in a position to stay in the lead when it comes to live video streaming.

Disney for it’s part made another shrewd investment. It’s no secret that their cash cow, ESPN, is having to adjust to the new realities of cord cutting. Enter an investment by it’s parent company and Disney has created an A to Z revenue stream when it comes to over the top video. It’s like selling the car and the gas that goes in it.

This is a very smart purchase by Disney. They have the cash to do it and it’s very well timed. It’s no wonder that the Disney board wants Bob Iger to stick around a bit longer. It will be interesting to see if BAM competitors like NeuLion look to cut deals or merge with CDN or network. In the meantime the only one doing better in this space is probably Amazon.com.

Skipper In The Storm

By Brad Hubbard | @bradhubbard


The head of ESPN, John Skipper, did an interview with the Wall Street Journal where he talked about cord-cutting, Apple, and ESPN’s plans.

John SkipperSkipper says that Apple is close to being a bigger player in the TV service realm but are ‘frustrated by their ability to construct something which works for them with programmers.’ The Q & A goes on to touch on Sling TV and sports rights.

The major hurdle Skipper and ESPN have, along with other outlets, is the handoff from traditional distribution to digital combined with the rising cost of sports rights.

The fact is this, digital doesn’t pull in the dollars like traditional cable and satellite distribution does. Hence people are reluctant to do anything that could effect the cash cow because that cow is how ESPN affords the $1.9 billion a year for NFL rights.

Skipper has a tough job, ‘how do you make the handoff and maintain or increase revenue at the same time?’ Not sure there is an answer until but you are at some point going to be forced to make decision. That moment is coming closer with the evidence being the 7 millions subscribers ESPN has lost over the last two years.

I think Skipper very much understands the situation and see’s the gathering storm. Some sign makers on College GameDay differ and they could be right but Skipper doesn’t sound to me like someone who is panicking. The next questions becomes, will the Disney board panic if subscribers continue to decline?

How ESPN Leaves Money on the Table

By Brad Hubbard @bradhubbard

Recently ESPN began to lay off a lot of people. Up to 5% of it’s workforce but ESPN has not confirmed that number. Either way, ESPN is laying off people. For those that don’t know, ESPN is the best profit source for it’s parent company DISNEY. But buying up sports media rights isn’t cheap and it may have, in the end, cost some people their jobs.

While ESPN continues to buy up media rights it has neglected a new revenue stream, YouTube. Yes ESPN has a presence on YouTube but not nearly the one it should. And while they wouldn’t get 100% of the ad revenue I’m sure they could get a pretty good deal  (maybe 80-20) and a high dollar CPM.

How would they do it? Well let’s start with the NFL Draft. ESPN has perhaps the best and most entertaining draft preview show, Gruden’s QB Camp. It’s a show with no regular time slot but it”s turned into an annual right of passage for QB’s (and other players) entering the NFL Draft.

Coach Gruden

This show was built for YouTube. It only runs about 25 minutes and has a great personality in Monday Night Football color commentator and former Super Bowl winning head coach Jon Gruden. He’s charismatic to say the least and the show has segments that could be expanded upon online.

While the main YouTube playlist would be Gruden’s QB Camp there should also be another playlist that just focuses on him on the practice field with the draft prospect. There could also be an outtakes playlist as well with some of Gruden’s best one liners and looks.

Gruden With EJ

Take one episode from TV and you could have three pieces of content online. Total, you’re probably looking at 250,000-300,000 views which can turn into a decent chunk of change for very low overhead (the initial costs were picked up under the TV production budget). ESPN does have some material under their Insider section on their web site which is about $40 a year. They do this right and they blow that number away (and without the print costs).

Not only is this a revenue generator but it’s also user friendly. Now fans can watch all the episodes if they missed it on TV (or even if they saw it and want to watch it again) not to mention the expanded content. Fans have more of a connection to those prospects and probably more incentive to watch the NFL Draft on ESPN later. What does that mean? More eyeballs equals more money for ESPN, Disney and the shareholders. More importantly, maybe this means ESPN doesn’t layoff as many people. That means less unemployment and a better US economy.

Just a thought.