Disney’s Direct-to-Consumer ESPN Would Be “Different Offering” Than ESPN+, CFO Says
When Disney eventually transitions its linear TV channel ESPN into a direct-to-consumer version, the resulting product would be a “different offering” from ESPN+, Disney CFO Christine McCarthy said on Wednesday at an investor conference.
“What ESPN+ is today is a complement to, not a substitute for, ESPN linear, so it doesn’t make any sense to just port over all of those linear rights — which come with rights expense — to an ESPN+ at the price point that it currently is,” McCarthy said at the MoffettNathanson Media and Communications Summit.
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Disney has for years been talking about pivoting from linear programming to direct-to-consumer, with sports projected to be the first sector to make the transition. During the company’s last quarterly earnings call, Disney CEO Bob Chapek also teased ESPN’s DTC future but noted that the hesitancy to make the transition sooner is because linear TV channels continue to be “cash generators.”
ESPN+ currently costs $6.99 a month and is available as a bundle with Hulu and Disney+ at a subscription starting at $13.99 a month. McCarthy suggested that Disney may still continue to offer ESPN+ as a “niche” but complementary service to a DTC sports offering, though the company’s plans continue to remain undetermined.
McCarthy also clarified confusion about a possible slowdown in subscriber growth in the second half of the year. Fiscal 2022 was always meant to be back-end loaded, McCarthy said, but the first- and second-quarter subscriber growth was stronger than expected. This means the difference between subscribers in the first and second half of the year will not be as large now.
“We still expect a strong second half of subscribers,” McCarthy said.
Asked why Disney does not simply focus on its streaming franchises, rather than spending on other content, McCarthy said the company is invested in telling stories and sees potential for growth there. Still, she noted that general entertainment is “additive” to the big brands.
“We have opportunity to grow in all of these brands, but the one we have the most potential in is general entertainment,” McCarthy said.
As for Disney’s theatrical release plans, McCarthy said the company believes audience members will continue to show up for superhero movies and less so for adult dramas. However, the company has seen it’s possible to develop a franchise via streaming, as shown through the success of The Mandalorian.
“It’s just not one size fits all,” McCarthy said.
