Sports

Disney’s CEO says there are too many ads on TV — and lays out ESPN’s plan for the future (DIS)

Bob Iger - Sun Valley Disney CEO Bob IgerGetty / Scott Olson

Disney CEO Bob Iger thinks there are too many ads on TV, and he’s exploring whether Disney’s ESPN and ABC channels should reduce the amount of commercials.

“In general there is probably too much commercial interruption in television,” Iger said during Disney’s quarterly earnings call Tuesday, especially when TV is competing with new digital upstarts like Netflix, some of whom don’t have ads at all.

Iger said Disney would evaluate the amount of ads aired within programs for its ESPN and ABC TV channels, though he did not say that any cuts to the so-called ad load were looming.

The Disney CEO also gave a lot of insight into how he thinks about the future of TV, and he seems particularly focused on new streaming TV packages, which compete with cable and satellite TV, and on “a la carte” services like HBO Now or CBS All Access.

Full stream ahead

ESPN saw a decline in revenue this quarter, and while Disney blamed most of it on a quirk in the college football schedule, Disney did acknowledge a decrease in subscribers. ESPN has lost over 9 million subscribers since 2013, according to Nielsen, and it’s a problem that isn’t likely to stop any time soon.

But Iger was upbeat about ESPN, and described a future for the network very much tied to an evolution of the TV landscape.

Iger said ESPN was already seeing “nice gains” in subscribers from streaming TV packages like Dish’s Sling TV, AT&T’s DirecTV Now, and Sony’s Vue. (He said these haven’t been fully counted by Nielsen.) These TV packages function much like a traditional cable or satellite TV plan, but are delivered over the internet, and are generally less expensive.

Disney is focused on making sure ESPN is in every package, even the ones with fewer channels.

Iger argued that if we end up in a world where $40 to $50 per month TV packages are more popular, that might actually be an opening for ESPN to capitalize on, rather than drop out of packages.

Iger said Disney would “aggressively” develop direct-to-consumer offerings, and that one tied to ESPN would launch “in calendar 2017.” He said that if consumers are spending less money on their cable bundles, they might be more likely to spend it on another service, like a direct-to-consumer “add-on” product from ESPN. That’s assuming that ESPN, which demands high fees, won’t slip out of the most popular streaming TV offerings (a nightmare scenario for Disney).

In Iger’s future, any declines in the traditional TV business would be offset by ESPN (and other Disney properties) getting onto all the digital TV bundles, and then selling other a la carte services.

Here is a rundown of ESPN’s future battle plan, according to Iger:

  • Launching ESPN on all new streaming TV services.

  • Investing in “industry-leading programming.”

  • Growing ESPN’s presence on mobile.

  • Investing in tech that will allow direct-to-consumer products, particularly with BAMTech, which Disney has invested $1 billion in.

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