Iger: NFL Lockout No Threat to ESPN

Claims college football, carriage fees will keep network humming

Walt Disney CEO Bob Iger on Tuesday said he did not believe the NFL work stoppage would level ESPN’s fourth-quarter ad picture, noting that college football should do much to help take the sting out of a lost pro football campaign.

Speaking to CNBC’s Julia Boorstin, Iger said the “huge demand” for male demos would help ESPN persevere in the event of a permanent lockout.

“Clearly, we’re hoping that the league and its Players Association resolve this and we get a season,” Iger said, shortly before Disney disclosed its second-quarter earnings. “If we don’t get a season, the impact on ESPN will not be significant.”

Iger went on to note that ESPN holds the rights to air nearly 300 NCAA football games, which would serve as contextually appropriate replacement programming in the event of the NFL season being scuttled. 

“We will see some extremely, extremely improved pricing for ESPN’s college football games. CPMs will be up, rates will be up,” Iger said. “They’ll probably expand their format so that they’ll add more inventory in order to take advantage of that. So the significant increases we’ll see not just in college football but in other ESPN programming will offset, at least somewhat, the impact of a [lockout].”

Under terms of its rights deal, ESPN’s Monday Night Football carries the lightest spot load of the NFL’s TV partners, with ad sales adding up to around $175 million. By comparison, Fox last season had the most skin in the game, having generated more than $975 million in ad dollars with its Sunday NFC package.

ESPN is also protected by its extraordinary carriage fee. The ratings generated by MNF allow ESPN to charge cable and satellite TV operators the highest carriage fee in the business—$4.40 per subscriber per month. Multiply that by 99.8 million subscribers, over 12 months, and ESPN’s annual affiliate revenue haul works out to $5.27 billion.

ESPN in 2010 wrapped its fifth season of Monday Night Football with record deliveries, averaging 14.7 million total viewers over the course of 17 games. In its final NFL broadcast of the season, ESPN on Dec. 27 drew 19.1 million fans with its coverage of the Saints-Falcons battle. According to Nielsen, the NFC South grudge match now stands as the third-most watched telecast in cable history.

Iger noted that Disney’s media networks unit put together a stellar quarter, boosting overall revenue 12 percent to $4.32 billion, up from $3.84 billion in the prior-year period. The cable networks, which include ESPN, Disney Channel, and ABC Family, saw revenue soar 17 percent to $2.83 billion, while the ABC broadcast business grew 4 percent to $1.5 billion.

Advertising played a huge role in cable’s growth, as ESPN pumped up its sponsorship dollars by 40 percent versus Q2 2010. Even when the additional Bowl Championship Series title games are factored out of the final analysis, ESPN’s ad sales dollars were still up over 20 percent year-over-year.

Looking forward to the 2011-12 upfront, Iger was optimistic. “Scatter pricing continues to be strong and we believe this bodes very well for the upfront, both for the broadcast network and also for ESPN,” he said. 

ABC’s upfront sales should rise by as much as 12 percent to $2.68 billion, on CPM hikes of 10 percent, Barclays Capital projects.

The broadcaster will present its 2011-12 programming slate on Tuesday, May 17, at Avery Fisher Hall.


Recommended articles