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Expand chart
Data: ESPN, Disney annual filings. Chart: Jared Whalen/Axios

ESPN was once America's largest cable network. As the pay-TV era nears its inevitable conclusion, what will become of "The Mothership"?

By the numbers: ESPN, like many of its competitors, is faced with the delicate task of planning for the future (i.e. investing in streaming) without cannibalizing the present (i.e. monetizing linear).

  • TV: 76 million pay-TV subscribers have access to ESPN, per Disney's annual SEC filing. That's a 10% decrease from 84 million at the end of fiscal 2020 — and a 24% drop from a peak of 100.1 million in 2011.
  • Streaming: ESPN+, which launched in 2018, ended the fiscal year with 17 million subscribers, up 66% year-over-year.

State of play: Cable subscribers pay nearly $10 per month for ESPN and ESPN2, while ESPN+ subscribers pay $6.99 per month. So you can understand why Disney is in no rush to exit the cable business.

  • But that approach conflicts with Disney's overall content strategy, which is to go "all-in" on streaming.
  • In fact, some analysts have even questioned whether Disney should spin off ESPN due to this strategic misalignment.

Put it this way: Disney makes more money from non-sports fans via streaming (Disney+, Hulu) than cable (entertainment networks like FX don't command high ad rates). The reverse is true for ESPN, which makes more money from cable subscribers than ESPN+ subscribers, not less.

Data: eMarketer; Chart: Axios Visuals

What they're saying: ESPN probably won't consider a direct-to-consumer service until the pay-TV bundle falls below 50 million U.S. households, which could happen in the next five years, CNBC reports.

The big picture: ESPN launched in 1979 as a TV network but has since expanded far beyond the living room and become a multi-platform behemoth — from the web to radio to fantasy sports.

  • Digital: ESPN Digital attracted a record 120 million unique visitors in October, including 95.2 million to ESPN.com alone.
  • Social: ESPN is Disney's largest social media brand, generating 63% of the company's total actions on Twitter, Instagram and Facebook.

What to watch: ESPN will have to figure out how to make up roughly $3 billion in annual lost pay-TV revenue that's coming in the next few years.

  • The plan, per CNBC, is to incrementally raise the price of ESPN+ as it adds more content, while maintaining its contractual pay-TV obligations (exclusive content like MNF's "ManningCast").
  • Disney will also "aggressively" pursue sports betting, which is now legal and operational in 30 states, plus D.C. "We have to seriously consider getting into gambling in a bigger way," CEO Bob Chapek told investors last month. A future "ESPN Sportsbook" seems likely.
  • Of note: Disney has said it may consider bundling ESPN+, Disney+, and Hulu into a single service. In the meantime, it just added ESPN+ and Disney+ to its Hulu live TV bundle ($72.99 per month).

The bottom line: Traditional TV is a leaky bucket that will eventually run out of water. But it's going to be a slow bleed, with networks like ESPN clinging to the cable bundle until the bitter end.

Go deeper

Updated 31 mins ago - Economy & Business

Janet Yellen co-opts Reaganomics phrase for new Davos speech

Treasury Secretary Janet Yellen at a speech this week. Photo: Alex Wong/Getty Images

The U.S. needs to focus on increasing its productive potential, Treasury Secretary Janet Yellen told world leaders Friday, calling for what she terms "modern supply side economics."

Why it matters: She co-opted a phrase traditionally used by political conservatives to describe low-tax and deregulatory policies — and framed the Biden administration's initiatives as the best path forward to achieve greater national prosperity.

National Archives releases Trump White House records to Jan. 6 panel

Photo: Chip Somodevilla/Getty Images

The National Archives on Thursday evening released records of former President Trump's White House to the House Jan. 6 Select Committee, the agency said.

Why it matters: The committee now has documents that Trump attempted to keep hidden, arguing that their release would undermine his executive privilege.

Worker shortage unleashes a forever jobs crisis

Illustration: Shoshana Gordon/Axios

Workers are in the driver's seat in the labor market, and that doesn't look likely to change anytime soon. It's also starting to alter the competitive landscape across the business world.

Driving the news: The terms of competition are shifting, especially in labor-intensive industries. Companies that have some distinct advantage in their ability to attract the best workers are likely to fare better.

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