Talk of ESPN's demise full of 'hyperbolic drivel,' analyst says
While facing legitimate concerns over rising costs for sports program licensing and falling carriage fees from MVPDs, ESPN remains a highly valuable asset.
And according to MoffettNathanson analyst Michael Nathanson, parent company Walt Disney needs to figure out how to "change the ESPN" narrative and reveal that much of the criticism of the national cable network amounts to "hyperbolic drivel."
Reports of ESPN's reduced subscriber ranks have cratered Disney's stock 21 percent since November 21. In fact, the weakening of the most powerful channel in the pay-TV ecosystem has been perhaps the video industry's biggest story ever since last summer, when Disney CEO Bob Iger first reduced earnings projections for ESPN.
Despite dour forecasts by some of his peers, however, Nathanson advises investors to hold the course with Disney. Nathanson also advises Disney to end the debate about launching an a la carte streaming service for ESPN -- it's a "manufactured debate," he said, based on a model ESPN has absolutely no incentive to pursue.
ESPN has been the subject of aggressive criticism from other analysts, most notably BTIG Research's Richard Greenfield, who recently commissioned a study suggesting that 56 percent of consumers would ditch the national sports channel if it would save them $8 a month on their cable bill.
The research also said only 6 percent of pay-TV customers would pay around $20 a month for an a la carte ESPN streaming service.
ESPN's Skipper: Cord shaving dinging subs, but ad sales and revenue stronger than ever
Survey: 56% of pay-TV customers would ditch ESPN in order to save $8 every month
Despite pay-TV subscription losses, ESPN in line for significant ad revenue increases in 2016