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Today is a watershed day in American sports-watching. For the first time, you can legally watch the country’s top sports channel without also paying for truTV, TLC, Bravo, Court TV, and the like. In fact, the day literally has a name, as certified by the National Day Archives: Happy National ESPN App Day to you and yours. (It should be harder to get a national day.)
That may sound like a lot of fanfare, but ESPN’s new direct-to-consumer service has launched with much less of a circus than a media industry watcher might have expected one, three, even five years ago. That’s because ESPN is releasing a revolutionary new project that it doesn’t really want you to buy.
The company has been working on this project—an offering of ESPN’s main channels outside the cable bundle—since at least 2023 and likely longer. The launch of this service, which will be called just “ESPN” and live in a revamped ESPN app, has loomed as a supposedly existential threat to the long-declining pay-TV bundle. “ESPN Gets Closer to a Move That Will Kill Cable,” Wall Street publication TheStreet declared after ESPN parent Disney made the plan public two years ago.
It was a simple enough prediction, and not an uncommon one. ESPN spent the 1980s and ’90s building up one of the greatest media business models ever. It hoovered up the rights to air major sporting events, calculating that fans would get so addicted to the games that the network could charge ever-escalating carriage fees to cable companies, who would happily swallow them rather than explain to their customers why they could no longer watch Monday Night Football. That allowed ESPN to become the most expensive set of channels on pay TV, now costing about $15 per subscriber per month.
Then cord-cutting happened, and ESPN lost nearly half of its pay-TV subscribers over the past decade and a half. Hence the need to sell its channels to people who no longer have any channels and the launch of this direct-to-consumer offering. But while the cable business has declined overall, the network’s business has kept on humming. ESPN’s subscriber fee was about $4 in 2010, when nearly 100 million households paid it. Now only 60ish million do, but they pay more than triple that price, and the company still charges the better part of $1 billion a month between traditional cable and services like YouTube TV (my personal favorite). That’s before selling commercials. ESPN has paid more and more to air NFL, college football, and NBA games, and cable companies have just kept on giving ESPN the money to afford those rights fees. The providers have passed those fees on to average TV-watching joes.
You can see, then, why ESPN President Jimmy Pitaro has tried to be clear: The network is not trying to compel you to cancel your cable subscription to sign up for this new service. “Our priority is looking at the 60 million–plus people that are on the sidelines,” he said in the spring, referring to people who don’t already have a bundled TV service. ESPN hasn’t been as explicit as Fox, which is also launching a streamer and has said outright that it doesn’t want to lose traditional cable subscribers to the new service. But with both words and features, ESPN has made clear that if you’re currently a cable subscriber, it is not all that eager to see you give that up to join its direct-to-consumer service. The launch of this fundamentally anti-bundle product is finally here, but the network wants you to remember: Bundles are pretty good!
Don’t get me wrong—Disney will take the money of anyone who wants to ditch cable to sign up for the ESPN stand-alone. The service will cost $30 a month, and Disney would rather have $30 than the $15 it collects, on average, for each cable customer. But the company doesn’t want too many people to avail themselves of that option. That’s because right now, even if you refer to the NFL as “sportsball” and know Travis Kelce only as Taylor Swift’s boyfriend, there is an excellent chance that you (yes, you) are paying a $15 tax to ESPN every month of your life. The megacorporation would prefer $30 to $15, but the genius of the cable bundle is that ESPN is getting $15 from millions of people who could not care less about sports. They pay it because their cable providers, leveraged by ESPN, do not give them the choice. The network collects tens or hundreds of millions of dollars from these non-sports people every month. If the cable companies run out of sports-loving customers and have only theater majors left, then the cable companies will no longer have reason to accept ESPN’s exorbitant fees and pass them on to customers.
In the status quo, ESPN can play hardball with cable providers to collect those fees. Disney likes to structure ESPN’s deals so that they expire at key moments on the sports calendar, such as the beginning of football season. But recently, cable companies have started to push back in an interesting way. When Charter and Disney resolved a carriage dispute around this time two years ago, the deal included a bunch of streaming carrots for Charter’s cable customers. Those customers will get free logins to ESPN’s DTC app to accompany an ad-supported Disney+ subscription they’re already receiving.
The cable companies know they can’t make it without ESPN, so they keep paying out the nose for it. But ESPN seems to have decided that it can’t live without the cable companies either. I imagine that execs reached that conclusion after asking a simple question: “Where else could we find tens of millions of people who will pay us $15 a month without really thinking about it, in perpetuity?”
There are other reasons for the network to not want cable dead. One is churn; cable customers typically sign up for at least a year, rather than in easily churnable one-month increments. Another is relationship maintenance. ESPN’s sports league partners all rely massively on pay TV, and making a move that tanks the pay TV bundle would screw with those leagues’ businesses. For all of these reasons, you will not find the phrase cut the cord in ESPN’s marketing materials for this launch.
If you’re trying to figure out whether you should cut the cord for this service, you can sort it out using simple napkin math. For example: My pay-TV service costs $83 a month. It’s appealing to get rid of that and shell out just $30 for the new ESPN. But I need to watch a lot of sports for work, so I’d get the ESPN bundle with Fox’s upcoming streaming service, taking me to $40. That’s still good value, but dropping YouTube TV might complicate my access to NFL Sunday Ticket, which lives on that service and costs some friends and me a few hundred bucks a year. I’ll also need to keep subscribing to Peacock, Prime Video, and Netflix to retain full access to the NFL and a few other leagues I watch. But with the ESPN–Fox bundle and HBO Max, I’ll have everything from the two biggest sports broadcasters and TNT Sports. Or at least I think I will—nobody knows if sports will survive on HBO Max once David Zaslav has finished chopping up the company he merged together a few years ago. I will also need to keep paying for MLB’s streamer so I can watch the disgusting Pittsburgh Pirates, but it sounds as if that service might be moving under the ESPN umbrella.
See? Being a sports fan is emotionally and financially healthy.
