ESPN is losing scale. Can it make it up in scope?

In 2010, ESPN reached its peak number of subscribers at 100 million.  In the seven years that followed, that number dropped by 12 percent to 88 million as emboldened (or fed-up) Pay-TV subscribers cut the cord.  For Disney, ESPN’s parent, the revenue loss is significant.  According to SNL Kagan, Disney was paid $7.21 per subscriber in 2016 by cable and satellite providers.  That number jumped to $9.06 if the sister networks (ESPN2, ESPNU, SEC Network) were included.  Assuming no change in programming fees, ESPN losses between $86.5 and $108.7 million in annual revenue for every 1 million decline in subscribers.  (Note: ESPN’s subscriber loss has averaged closer to 2 million per year.)

In 2017, Disney/ESPN spent approximately $7 billion on sports programming rights.  Just to cover these costs, ESPN needs 88 million subscribers paying $6.63/month.   With acceleration in Pay-TV subscriber losses expected, ESPN is going to have to get creative to sustain profitability.  It may control the bleeding somewhat by sports fans adding the newly launched direct-to-consumer app, ESPN+, that Disney is charging $4.99 per month for.  But, with this pricing model, Disney is going to have to add nearly 2 customers for every one lost by cord-cutting.  Brand reputation aside, this may be very difficult to do in an increasingly fragmented media market.