D.C. Memo: Full ESPN App a 'Cataclysmic Event’ in 2025 for Cable, CNBC Reporter Says

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ESPN: Nexstar CEO Perry Sook sees it this way: When enough pay-TV subscribers who are not big consumers of news and sports have left the cable and satellite TV ecosystem, subscriber losses will plateau and cord cutting as a threat to TV stations’ retransmission consent revenue will diminish to something quite manageable. Sook’s theory is about to undergo a severe stress test in 2025 when Disney is expected to launch the flagship ESPN app with all the bells and whistles. CNBC media and sports reporter Alex Sherman thinks a Disney-induced earthquake is about to hit the pay-TV world. “The biggest media and sports story is the launch of the ESPN flagship streaming service. When that launches – which is going to be around August of 2025 – it's at least possible that hundreds of thousands, millions of people over the next several months cancel cable, now that ESPN is available for the first time out of the bundle,” Sherman said on the CNBC cable business channel on Dec. 23. Sherman and his CNBC colleagues know firsthand about the structural changes wrought by video streaming, as CNBC parent Comcast in November said it was planning to spin off CNBC and a bevy of other networks, including USA Network, MSNBC, Oxygen, E!, SYFY and Golf Channel. But according to Sherman, the rollout of the ESPN app could devastate what’s left of the traditional pay-TV subscriber base. “If that happens, it will just be yet another cataclysmic event to the cable TV landscape, and it's no wonder that you see Comcast now spinning out its cable networks [and] Warner Bros. Discovery splitting its company into two, separating cable and the rest of the business,” he said. Earlier in the year, NCTA – The Internet & Television Association – which represents Comcast, Charter Communications, and various programmers, including Disney — told the FCC that “the percentage of households without traditional MVPD service now stands at 59%, meaning that a consumer today is more likely not to subscribe to a traditional MVPD service.” Charter is trying to defend the cable bundle and blunt the impact of streaming by giving "TV Select Plus” subscribers free access to the ESPN+ streaming service – a $109.00 yearly saving. In September 2023, Charter announced that ESPN’s “flagship direct-to-consumer service will be made available to Spectrum TV Select subscribers upon launch.” But Sherman’s point was that these offers might not be sufficient to keep sports fans from dropping cable in favor of the ESPN flagship app embedded in Disney+. “We know that’s going to be a bad event for the cable landscape. We don't know how bad,” Sherman said.