CNBC’s Jim Cramer Says Disney Reorganization Is Really About ‘Getting Rid of ESPN’

AP Photo/Jessica Hill

It’s no secret that Disney is looking at reshuffling its chairs as the massive organization undergoes an equally massive reorganization. Though, it may surprise some to learn that the “Magic Kingdom’s” premier sports network could be left without a seat when the music stops.

That bit of news comes by way of Jim Cramer, host of Mad Money on CNBC, who says he believes the reorganization is aimed at “getting rid of ESPN.”

On Monday, Disney said in a news release they move to accelerate their direct-to-consumer strategy. In this pursuit, the company appointed a centralized distribution group to oversee the global distribution and commercialization of content.

“The company’s three content groups ( Studios, General Entertainment and Sports) will be responsible and accountable for producing and delivering content for theatrical, linear and streaming, with the primary focus being the company’s streaming services,” the statement read.

Cramer, though, told that sees the sports portion of Disney’s content groups as possibly no longer including ESPN.

“I think it’s really about getting rid of ESPN,” Cramer said of the focus on direct-to-consumer strategy.

“There is a belief we’re saturated in sports,” Cramer explained. “That ESPN is no longer integral.

“ESPN used to be this unbelievable thing, and now it’s just a really expensive thing they are having trouble monetizing. ESPN is no longer the precious place that it once was.”

Cramer went on to say that league-run networks such as NBA TV and MLB TV have “bastardized” sports watching.

The ever-shrinking number of ESPN subscribers certainly reinforces Cramer’s view that the network is no longer seen as “integral.”

As Outkick reports, “ESPN went from slightly over 100 million cable subscribers in 2010 to slightly over 80 million earlier this year,” OutKick’s Ryan Glasspiegel wrote this week when the Disney news was announced. This affects every cable network. Cable news has been thriving in viewership for a number of reasons, but it is still facing the subscriber declines of the rest of the industry. The issue for ESPN in particular is that they have by far the biggest subscriber fees of anyone in the business.

“This is the rough math: Between ESPN and ESPN2, the subscriber fees total about $10 a month. They’ve lost about 20 million subscribers, which is $200 million a month, which is about $2.4 billion a year in lost revenue.”

How much longer can even an immensely wealthy company such as Disney tolerate those losses, especially when ESPN has to spend billions each year to sports leagues for the rights to broadcast games? Games which, especially in the case of the NBA, are being watched less and less all the time?

The likely answer is, not much longer.


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