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A very unexpected ESPN update and potential sponsorship issues

May 24, 2023, 5:15 PM ET [11 Comments]
Jeremy Laura
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Let me start by saying this. I absolutely hate corporate mergers, shareholder meetings and internal politics. If this didn’t directly affect hockey, I would be gleefully ignoring all of it. When I mention “politics”, it is specific to the ESPN situation and its parent company. There was a comment on one of my last articles that there are serious issues being debated and that is absolutely true. For the sake of a hockey blog, I’m sticking just to the “political battle” that is bandied about in the space of this one company. I am going to mention a second issue (not mentioning the company) that also affects sports in general.

Last night, some of the notes from the WDW shareholder’s meetings (packets) were made public via youtube and other platforms. There are many issues, but this is the big one. On hand cash or cash equivalents is listed at around 10 billion dollars. That sounds like a lot, but is in reality about 3 to 6 weeks of operating $. In 2020 that number was around 110 billion. That’s why this was a big deal.

Some of you took advantage of the Hulu/D+/ESPN+ bundle when it was first introduced. I found out early this year that about 33% of Hulu belongs to Comcast/NBC Universal and in the deal Comcast can force the sale of the remaining 3rd which will be an estimated 20-30 billion. Do you see the number issue? So in the past week a hotel in the Florida park was closed and the tax write off (300 million) is estimated to be higher than the profit that institution could make in the next year. (For a family of 4, a “voyage” of a few days was 6K and didn’t include some “beverages” and other issues). There are dozens of shows being pulled from the main streaming platform now as well. So what? Once they’re there, aren’t they paid for? No. In fact, part of the upcoming actor’s strike (writers still striking) is the residual pay scale. Until a show is “public domain”, surviving actors, writers, producers and IP holders get paid. Think of when Ron Howard was in “Andy Griffith” and “Happy Days” and how many residuals he’s made on those 2 shows. He is, sadly, one of the last surviving cast members for AG.

Here’s what happened with ESPN. While sitting at the feet (virtually) of a literal genius in these matters, it was briefly mentioned that ESPN is moving more and more to streaming. Many of you aren’t big fans of streaming (at least vocally). This coincides with the layoffs coming soon (Disney just announced another 2500 cuts). On air talent is said to be targeted for June on ESPN. My personal opinion (that’s all this part is) is that “the volume” (made for Star Wars IPs, it looks like a living set) could easily replace most of ESPNs actual sets, camera operators, and other positions. That’s a statement of sadness. Worst case scenario is a full move to streaming. I did not know that cable cancellations were as bad as they are becoming. I knew they were bad.

So, brace for that. We still don’t know Bally’s fate. Here’s the sponsorship news. A major sponsor across nearly all sport platforms is down 110 million in sales YTD and lost 15billion in market share. Some of you already know who, but I’m not going to get into it. A JP Morgan analyst expects a 13% decline year over year for the next couple years. Anyone who’s owned a business knows that advertising is one of the first “cuts”. This would not be a good time to lose a major ad partner.

In finality, just like we saw personalities disappear when NBC and the NHL parted ways, broadcasts could look vastly different. Detroit is in a unique situation. A major “sponsor” for the Red Wings is a company that benefits from hard financial times and a reduction in seated dining. Little Caesars pizza had no contact pickup ready to go, and continue to be able to function in smaller retail space with a lower price tag than many competitors. A “hot and ready” is actually cheaper than some of the frozen pizzas at our grocery store.

Montreal, Toronto, New York (Rangers) and in my opinion Detroit are better poised due to sponsorship stability (Montreal and Toronto), Huge fan bases and brand recognition. I’m bracing for the news after June 1. I will present it as best I can without dragging very combustible issues into the fray. Part of me had hoped that there would be a “level off” with streaming but it looks like a double down. ESPN is making changes as its parent company prepares for a lot of new debt while Hulu is merged into a single entity. Just keep your eyes open and once the path forward is clear we’ll figure out the landscape and find a way to function.
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