On Wednesday afternoon, Walt Disney (DIS 102.58, -0.16, -0.2%) disclosed in its annual 10-K SEC filing that it lost another 2 million domestic ESPN subscribers in fiscal 2017 (ending October).
- Total ESPN subscribers fell to 88 million -- the lowest level since 2003. ESPN had 90 million subs at the end of last year, down from 92 mln two year ago and down from 95 million at the end of fiscal 2014.
- Domestic ESPN subscribers peaked at 100 million in 2010.
- The Worldwide Leader in Sports continues to lose subscribers as consumers 'cut the cord' -- opting to stream content online instead of paying for an expensive cable bundle. Social media has also cut into traditional TV viewership.
- Less subscribers means lower ratings and lower advertising sales revenue. Meanwhile, ESPN has signed longer term contracts for sporting rights, which are going up.
- Earlier this month, Disney reported fiscal 2017 cable networks revenue down 1% to $16.5 billion with operating income down 10% to $5.4 billion.
- To combat all of this, Disney is launching its own over-the-top (OTT) ESPN offering 'ESPN Plus' in the Spring of next year. Disney also plans to launch a streaming service for its other Disney content, including legacy animated franchises, Marvel and Lucas Films in early 2019.
- The strength of Disney's movie studio has offset the decline in the company's cable assets in recent years.