ESPN / Disney Cable Networks advertising & marketing assignments

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Selected ESPN advertising

ESPN is the undisputed leader in sports programming in North America, the top channel for US males, and the most valuable cable brand in the US and the world with estimated revenues across its various strands now around $12bn annually. With the highest monthly cost by far of any US cable brand, the main ESPN channel generates around $8.6bn a year in affiliate and subscription fees, plus more than another $2bn in advertising income. Parent group Walt Disney has leveraged that appeal across other assets, launching spin-off channels ESPN2, ESPNEWS, Spanish language ESPN Deportes and college sports specialist ESPNU. There are also alliances in Canada and Latin America. However, a move into the UK and Asia in the late 2000s was far less successful, and both local ventures were quickly cancelled. Despite its popularity in the US, ESPN has not been immune to the growing trend towards "cable-cutting" by US viewers shifting to lower-priced on-demand services over traditional cable. Audience is currently at its lowest level since the early 2000s: a footprint of 83m US households at the end of 2019 was down from a peak of 100m in 2011. Viewership was down 2% to a daily average of 1.75m total viewers, though that still ranked ESPN as the #6 US channel overall, and #2 cable strand (behind Fox News). That year, Disney launched ESPN+, an "over the top" streaming service with new content that complements but doesn't replace the cable channel. It reports separately under Disney's direct-to-consumer division but has enjoyed only modest success compared to Disney's other streaming services, with just 10m subscribers by Oct 2020.

ESPN is partnered by broadcast channel ABC and a collection of Disney-branded cable strands led by The Disney Channel. It acquired several additional channels in 2019 as a result of its takeover of 21st Century Fox entertainment, most notably FX and National Geographic Channel. Disney is also joint owner with Hearst Corporation of the A&E Networks portfolio (Hearst has a separate 20% stake in ESPN), and has a minority stake in Vice Media. Cable Networks generated revenues of just under $18.0bn for the Walt Disney group in ye 2020, and operating income of $6.3bn. The group doesn't break out results by channel but acknowledged "lower results at ESPN, partially offset by increases at FX Networks and the Domestic Disney Channels". James Pitaro replaced John Skipper at the end of 2017 as co-chairman of Disney Media Networks with responsibility for ESPN. Following a groupwide restructuring to separate production and distribution of content, the Disney and Fox TV production studios were merged under the control of Peter Rice, chairman, general entertainment content. Kareem Daniel was appointed as chairman of media & entertainment distribution, which includes the broadcast and cable channels. ESPN was founded in 1979 by former ice hockey star Bill Rasmussen and his son Scott Rasmussen, with backing from (incongruously) Getty Oil. It was acquired five years later by ABC Television.

Capsule checked 19th November 2020

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Recent stories from Adbrands Update:

Adbrands Weekly Update 21st Dec 2017: John Skipper, president of Disney's top-rated ESPN cable sports channel, has resigned with immediate effect to battle a drug problem. Few details were disclosed but in a statement, Skipper wrote: "I have struggled for many years with a substance addiction. I have decided that the most important thing I can do right now is to take care of my problem... I come to this public disclosure with embarrassment, trepidation and a feeling of having let others I care about down." Disney CEO Bob Iger added a message of support and understanding, and announced the reinstatement of Skipper's predecessor George Bodenheimer as acting executive chairman for at least the next three months. The announcement was entirely unexpected - only last month Skipper signed a contract extension through 2021 - and the timing is unfortunate. Disney has already announced plans to launch a dedicated streaming service for ESPN in 2018 to combat a slump in viewers as a result of cable-cutting. ESPN's current subscriber estate of 87m households is down from 100m in 2011.

Adbrands Weekly Update 24th Aug 2017: ESPN appointed Droga5 to take charge of its US advertising, a role previously held by Wieden & Kennedy. 

Adbrands Weekly Update 17th Aug 2017: Disney took steps to reduce the future threat from Netflix and other streaming video rivals, by announcing plans for its own equivalent service in 2019. As a result, Disney and Pixar movie releases will no longer be available on Netflix (and presumably other such platforms) after 2018, although the two sides are still in negotiations over the future of movies from the group's Marvel and Lucasfilm units. Disney will also create other proprietary content for the new streaming platform. The group also plans to launch a separate streaming service for ESPN in 2018, offering MLB and NHL games as well as other content. It will complement the existing ESPN cable service not replace it. Both streaming services will be build on the platform operated by BAMTech, in which Disney already has a 33% shareholding. It will increase that holding to 75% for an additional payment of $1.6bn.

Adbrands Weekly Update 22nd Jun 2017: Vice Media raised a further $450m in cash from private equity firm TPG Capital, raising its valuation to a rumoured $5.7bn (and making CEO and co-founder Shane Smith a paper billionaire). The upstart media creator said it will invest the funds in scripted programming for its US cable channel Viceland, and also on a direct-to-consumer streamed subscription service. Disney, which had already acquired a direct 18% holding in Vice in 2015 and has additional shares through its A&E Networks joint venture with Hearst, is not taking part in the new funding round, and will have its stake diluted. According to reports, Disney is more focused on shoring up its cornerstone ESPN channel. For all the hype surrounding the Viceland launch, that channel has struggled to attract viewers, averaging just 96,000 nightly primetime viewers since last September.

Adbrands Weekly Update 17th Nov 2016: Walt Disney's movie studio delivered record performance for its most recent financial year, ended September, as did the company as a whole, but investors are still obsessing over the TV business, and especially cable sports network ESPN. New figures from Nielsen suggested the channel lost a record 621,000 subscribers during October alone, though that figure was hotly denied by Disney. Even more worrying was a 13% decline in ESPN's ad revenues, fed partly by lower ratings, but also competition from NBC's Olympics coverage and huge spending cuts by fantasy sports advertisers DraftKings and FanDuel. That contributed to a weaker than expected final quarter for the group, in which the media networks division generated less than half group operating profit for the first time for more than a decade. For the year as a whole, though, group revenues rose 6% to a best-ever $55.6bn, while net income was up 12% to a record $9.4bn. The cornerstone of that growth was the movie studio, with divisional revenues soaring by 28% to $9.4bn on the back of global smashes led by Star Wars The Force Awakens, Captain America Civil War, Finding Dory and Zootopia. Parks & Resorts also enjoyed a strong year, helped by the opening of Shanghai Disney Resort. That offset weaker growth (but growth nonetheless) at the TV division, where better performance from the ABC network counter-balanced the worrying stagnation in revenues from cable channels including ESPN and a slight decline in divisional profits. Consumer Products & Interactive Media was dented by a slowdown - finally! - in sales of Frozen merchandise and exceptional costs associated with discontinuation of the Infinity console gaming platform. CEO Bob Iger's priority for the new year is to find a key to reigniting ESPN's appeal with viewers while also maintaining the contribution from the studio and other businesses.

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