Can ESPN Cut The Cord?

Setting the table: In 2015, Bob Iger went on CNBC’s Squawk Box and said the quiet part out loud.

One day, ESPN would sell directly to fans. Not through Comcast. Not through Charter. Straight to the millions of people who live and die by sports.

At the time, it felt obvious. Of course, ESPN would move to streaming. Netflix had already rewritten the rules. Cord-cutting was accelerating. Why wouldn’t the world’s most powerful sports network take control of its destiny?

And yet — it didn’t happen. For more than a decade, ESPN clung to the cable bundle, squeezing billions from a model where sports fans — and non-sports fans — paid whether they watched or not.

Now, the inevitable is here. ESPN is finally going solo. After decades of being the glue holding cable together, the network is testing whether it can survive on its own.

Let’s break it down into 6 big questions:
1) Why now?
2) Why is this a big deal?
3) Why did ESPN wait so long?
4) Who’s it for?
5) How does ESPN make money?
6) How much does ESPN spend on sports rights?

Why now?

ESPN protected its golden goose for years. But cord-cutting exploded. ESPN has lost 40M subscribers since its peak (100M) in 2011.

ESPN subscribers (% growth) according to Kagan:
1) 1995 - 68M
2) 2005 - 90M (↑ 33%)
3) 2015 - 91M (↑ 1%)
4) 2025 - 60M (↓ 35%)

Video: Disney’s Fight To Save ESPN From Cord Cutters

Flashback: ESPN (Finally) Goes Solo

Why is this a big deal?

ESPN is the glue in the cable bundle — accounting for 30% - 40% of all sports watch time.

Why this matters:
1) Sports is (finally) moving fully online
2) This move could accelerate pay-TV's decline

Why did ESPN wait so long?

Quick answer: ESPN was the single biggest winner from the pay-TV business model and wanted to keep it intact as long as possible.

Quote from Andrew Marchand - Senior Writer @ The Athletic:
“ESPN’s dual cable revenue sources of subscription and advertising is arguably the greatest business model in media history. With its location in the lowest basic cable tier, it has meant that everyone, sports fans or not, paid for ESPN. By 2011, a little more than three decades into its existence, ESPN reached 100 million subscribers, generating hundreds of billions in revenue over the decades and allowing ESPN to keep pace on a spending spree of nonstop, wide-ranging rights and talent acquisitions to sustain the model’s flywheel.”

Quote from James Pitaro - Chairperson @ ESPN:
“We decided to pursue a 'crawl, walk, run' strategy for ESPN in the direct-to-consumer world.”

Who’s it for?

Target: The 65M households without pay-TV.

Pay-TV status  (% of total) according to Kagan:
1) Pay-TV - 66M (51%)
2) No pay-TV - 65M (49%)

The big picture: By 2035, I project 80M households will be outside the pay-TV bundle. ESPN wants to generate revenue from these households. The trick is to do this without disrupting the current cash cow (pay-TV).

How does ESPN make money?

2024 revenue for ESPN (% of total) according to Kagan:
1) Subscriber fees - $7.9B (75%)
2) Advertising - $2.4B (23%)
3) Other - $268M (2%)
4) Total - $10.5B

How much does ESPN spend on sports rights?

Quick answer: ≈ $10B per year. $80B committed since 2020.

Wow: $127 in programming costs per subscriber last year.

Bottom line: ESPN built its empire on cable. Its future depends on streaming. This launch is less about chasing Netflix — and more about survival in a world where less than half of households have a pay-TV bundle.