ESPN's layoffs underscore its desperate need for a post-cable lifeline, but analysts are split on Disney's streaming plan that puts $20 billion of revenue at risk
and sports while giving Comcast an ESPN-NBC Sports super-network with better bargaining power.
Brandon Nispel, an analyst at KeyBanc Capital who sees modest upside for Disney shares, agreed that severing ESPN would be a serious challenge. He suggested Disney should keep it unless an offer from a prospective buyer blows Iger and his board away — adding it's not immediately clear who that buyer would be.
While the cable bundle may never come back into vogue, Bazinet said he thinks Disney should try to work with NBC and other networks to create a sports-only streaming bundle with all the games. Even a monthly price as high as $55 would cost half as much as the average cable bill, he said. Those who don't watch sports cut the cord at roughly twice the rate of sports fans, Bazinet's research shows. Even still, he estimates that 15-20 million sports fans don't have cable, and his base case is that 20% of them would consider buying ESPN on its own.
One of Wall Street's top Disney bulls, Wells Fargo's Steven Cahall, also happens to love ESPN. He believes an ESPN streamer priced at $20 per month that launches late next year could drive significant revenue growth and billions in profits without causing rampant cord-cutting.
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