If the Walt Disney Co. is to bounce back from a pandemic-plagued third quarter, it’s going to need college football’s Power 5 conferences to stage a healthy and unabridged season that culminates in a national championship game. Whether the SEC, ACC, Big Ten, Big 12 and Pac-12 can pull off a fall campaign in the absence of a protective bubble remains to be seen.
Speaking to investors during the Mouse House’s Tuesday afternoon earnings call, Disney CEO Bob Chapek sidestepped a question as to whether ESPN and ABC’s affiliate revenue would slump if fall football were to be sidelined by the coronavirus.
“In terms of the college football, I don’t really want to comment on the possibility of the season going on because that’s up to the [conference] commissioners.” Chapek demurred. “That being said, we have certain programming-hour covenants with our partners that we have to meet, but we feel confident we’re going to be able to reach that.”
An hour after Chapek addressed the issue, a similar question was posed to Fox Corp. CEO Lachlan Murdoch, who told analysts that the company “fully expect[s] both college football and the NFL to come back in the fall.” Murdoch said that the Fox Sports brass expects to hear from the conferences later this week, adding that Fox is “full-speed ahead and working with both [groups] to ensure a safe, consistent and full season for the NFL,” as well as a somewhat reduced conference-only slate for its college partners.
Fox’s first national NFL window is scheduled to kick off on the afternoon of Sunday, Sept. 13. In what’s certain to draw a massive crowd of TV viewers, the network starts its season with a showdown between the recently transplanted Tom Brady and the Tampa Bay Buccaneers and the howitzer-armed Drew Brees and his New Orleans Saints.
The SEC, Big Ten and Pac-12 have separately agreed upon a conference-only schedule, while the ACC and Big 12 schools all plan to play one non-conference game along with their standard roster of in-house contests.
Chapek’s comments came on the heels of an executive order by Mississippi Gov. Tate Reeves, who this afternoon issued a mandate that requires all Magnolia State residents who venture out in public to wear a mask for the next two weeks. Failure to abide by the emergency measure may result in a misdemeanor fine of $500, up to six months in jail, or both.
Reeves said his desire to watch college football played a significant role in his decision to make mask-wearing mandatory. “I know that I want to see college football in the fall,” Reeves said in a Tuesday press briefing. “The best way for that to occur is for us all to recognize that wearing a mask, as irritating as it can be—and I promise you I hate it more than anybody watching today—is critical.”
If college football is a form of secular religion in the south, perhaps no company is praying harder for a successful autumn run than Disney. As Sportico reported last month, the ESPN family of networks last season generated $792.5 million in ad sales revenue over its slate of 282 televised games. The New Years’ Six games and the January title tilt alone scared upon $266.6 million, per Standard Media Index data.
Along with fall football, Disney is also placing a big bet on direct-to-consumer launches. The company today revealed that its Disney+ service has signed up 60.5 million worldwide subs since it launched on Nov. 12, 2019. The more mature ESPN+ DTC offering boasted 8.5 million subs as of June 27, which marks a 254% lift compared to 2.4 million in the year-ago period.
When asked when the company may begin kicking the tires on a more robust ESPN-branded DTC service, Chapek said Disney is “certainly open” to unbundling the linear ESPN TV network sometime down the line. “We’ve looked at everything,” Chapek said, before adding that as sports is properly monetized, there’s no rush to make any radical changes to Bristol’s core business model.
While cord-cutting serves as a real existential threat to the traditional pay-TV business, ESPN’s affiliate fees are an argument for maintaining the status quo as long as is economically feasible. Each month, the network receives $9.06 for every household that subscribes to its TV feed, a premium rate—the industry average is around 40¢ per sub per month—that this year will pump some $8.8 billion into ESPN’s coffers.
As expected, Disney’s quarterly earnings were blighted by the coronavirus shutdown, which tore the stuffing out of its parks and theatrical units. Revenue for the quarter was down 42% to $11.8 billion as parks plummeted 85% to $983 million and the studio division dropped 55% to $1.74 billion. Media networks were stable, slipping just 2% to $6.56 billion.
Revenue at Disney’s cable networks fell 10% to $4.03 billion, while the broadcast side of the ledger managed to improve 12% to $2.53 billion. ABC saved a bundle on production expenses when The Bachelorette, American Idol and Grey’s Anatomy went on hiatus back in March, while ESPN deferred an undisclosed portion of its scheduled NBA and MLB rights costs.
For its part, Fox posted quarterly revenues of $2.42 billion, a 4% drop versus $2.51 billion in the analogous period in 2019. Growth in affiliate revenues was more than offset by a 22% decline in advertising revenues ($712 million, down from $918 million).