The demise of cable television -- brought on by younger people deciding to cord-cut, or not renew their costly cable subscriptions in favor of cheaper streaming services -- has been in the works for years as networks, such as ESPN, struggle to convince cable providers to continue shelling out large amounts of money per subscriber.
This has led to cost-cutting at ESPN, as big-name talents like Skip Bayless and Mike Tirico have left the company in recent weeks. ESPN's parent company, Disney ($DIS), released its quarterly earnings for the second quarter of 2016 this week and, unsurprisingly, earnings were below what the company forecasted.
However, even as Disney's earnings per share at $1.36 was $0.04 below what was expected, operating income for media networks increased significantly, which includes ESPN. The company attributed this partly to lowered costs at ESPN, which laid off hundreds of editorial and production employees in October.
Still the most prominent name in sports networks, ESPN's demise may be overstated, same with Disney's as a whole. The network is still engrossed in profitable MLB, NBA, NFL and NCAAF football deals and, with a hopefully more-streamlined workforce, should be able to continue to post strong results in the near-future.
The over 12 percent growth in operating income for ESPN alone is another promising sign for a network that most analysts are down on. But it's not like ESPN, or Disney for that matter, is going away any time soon. The recently announced content partnership between Vice and ESPN should also help matters a bit.
Gone are the days of ESPN being the only tree in the live sports programming forest. FS1 and Fox Sports' other properties are now in the market -- even as underwhelming as they've been in their infancy -- as are NBC and FOX. But, ESPN is by far the most trusted and watched network among sports fans in the US and the earnings forecasts will probably need a few quarters to get used to both the slimmed-down ESPN and additional competition. Still, I think ESPN -- and Disney, as a result -- has a brighter future ahead, especially when Bob Iger's eventual replacement is named. It's still the Worldwide Leader for a reason.
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