Sports Costs Too High? Iger Calls Out Regional Nets
When asked about the high cost of sports on TV, Walt Disney Co. chairman and CEO Bob Iger said that his ESPN unit provided a much better value than expensive regional sports channels.
Iger, speaking at the Sanford C. Bernstein Annual Strategic Decisions Conference, also said Comcast would be launching a Watch Disney app as soon as next week, and took a shot at Dish Network’s commercial-skipping DVR.
“ESPN gets tarred a bit with the same brush that some of the RSNs get tarred with. That’s really unfair,” said Iger, responding to a question from Bernstein analyst Todd Juenger about the rising cost of cable programming.
“If you look at the cost of those channels, versus the ratings they deliver and the amount of original programming they deliver, it’s not even close to what ESPN delivers,” Iger said. “In some markets, ESPN out-rates some of these RSNs, I think it’s four to one — the collection of all these RSNs in a market in primetime programming — and programs hundreds and hundreds of hours more of live sports than any of those.”
Iger said that overall, cable rates haven’t gone up much faster than investments in programming. “So if you look not just at ESPN, but across the collection of channels that are out there, the quality of the programming and the value of that programming deliver to both the consumer and the distributor is much greater than it ever was,” Iger said. “We also do not sense that they typical expanded basic subscriber is dissatisfied with their product. They generally are pleased with the variety of programming they get and the quality.”
While ESPN has been raising rates, “we’re not trying to kill the golden goose,” he said. “I don’t think we’ve been reckless about our rate increases and I think they’ve largely tracked the increased value that we’re offering.”
One way Disney is creating more value for distributors is through its TV Everywhere app, including WatchESPN. Iger said that a new Watch Disney Channel app is like to be launched next week to Comcast subscribers.
Iger said “Comcast launched WatchESPN a few weeks ago and is now launching the Disney Channel and ultimately the other apps,” including an ABC Family app.
The apps deliver value for the operator and the subscriber by letting them consume content outside the home, and generate increased revenue for Disney. “We got paid by Comcast, for instance, for what we call TV Plus capability,” he said.
Iger was also asked about Dish Network’s Auto Hop service, which eliminates ads when broadcast primetime shows are played back. Fox, NBC and CBS have sued Dish over the product; Dish has sued Fox, NBC, CBS and ABC for trying to stifle it.
“I happen to believe that what they’re doing is harmful both to our business and to theirs,” Iger said. “It feels like a bite-the-hand-that-feeds-you approach in my opinion, because the quality of the programming that we make, which is reliant on a variety of forms of revenue including advertising, is important to them. So by attacking the revenue model, the business model, one has to question in the end what ultimately if they’re successful it does to the ability to invest in that product and if that gets limited or hindered in any way or indeed diminished, what does it do to them? But they don’t seem to care about that.”
Asked about ABC and the broadcast business, Iger said that the combination of ABC, the TV studio and the stations continues to make money. “That’s not a bad business to be in,” he said.
He added that while the station business had changed, he wasn’t in favor of the kind of local news sharing arrangements that have been written about lately.
“That certainly wouldn’t be considered good for our business. We think we have distinct local news brands. Most of them are No. 1 in the market; if they’re not No. 1, they’re No. 2 and they tend to rely on a very strong local news brand. And we don’t want to diminish that or dilute it in any way with a
partnership,” he said. “It could be tempting because of the cost savings but in doing so you can damage your brand pretty quickly and I’m not sure what that business is without that strong local news brand.”