The Economics Of ESPN

March 29, 2013 in Daily Bulletin

ESPN is owned by Disney and is probably responsible for 60% of Disney’s cash flow and half of its share price writes The Economist:

  • ESPN has done incredibly well because it was quick to realize the importance of showing sports live as they happened.
  • The channel is also good at bidding for exclusive rights so that content available on ESPN isn’t available anywhere else.
  • ESPN also has affiliate fees – which cable operators pay to carry its channel. This is a more lucrative and more stable funding source for ESPN than advertizements, keeping ESPN’s profits healthy.
  • Competition is rising though. ESPN sold off its British assets because it couldn’t acquire the rights to broadcast football there.
  • But even if ESPN fails to acquire the rights to some content, it can take solace in knowing that its customers are mostly locked into long-term contracts and can’t leave.

Read more about the channels humble origins in a prostitution ring, its relationship with Disney, and some more of the secrets to its success over here.

Source: The Economist