If ESPN doesn't exist in 20 years, we will look back at what's happening right now between the "Worldwide Leader" and YouTube TV as the first major step in the network's ultimate destruction.
What ESPN is doing, in my assessment, is a naked attempt to drive consumers to its direct-to-consumer app that launched in August and costs $30 per month. Or if viewers don't ditch YouTube TV for the ESPN app, they may instead subscribe to Hulu to get ESPN content, and Hulu is owned by ESPN's parent company, the Walt Disney Company.
But in ESPN's short-sighted strategy to drive consumers to their new, expensive app, they have made a potentially fatal mistake: ESPN picked a fight with an 800-pound gorilla in YouTube TV, and in coming years King Kong will be looking to smash things, starting with the one-time Worldwide Leader in Sports.
Don't pick a fight with a wealthy 800-pound gorilla
In business terms, ESPN has declared war on YouTube TV.
While ESPN attempts to drive BYU fans and other sports media consumers to its app, they at the same time are giving YouTube's parent company every incentive it needs to wipe ESPN off the map. For those who don't know, YouTube is owned by Google, whose parent company is called Alphabet.
In 2024 Alphabet's sales revenues were $350 billion with net income (earnings) of $100 billion. The company currently has $98 billion in cash on hand. Over the last five year's Alphabet's stock price is up 225%.
In 2024 Disney's sales revenues were $91 billion with net income of $900 million, down from $1 billion in 2023. Disney has $5.4 billion in cash on hand, which is down from $14.2 billion in 2023. Over the last five years Disney's stock price is down 13.5%.
To summarize, Alphabet's earnings last year were $100 billion (with a "B") while Disney's were $900 million (with an "M").
Just pause for a moment and let that sink in.
From a financial standpoint, the combined powers of Alphabet/YouTube TV can quite literally crush Disney/ESPN. And with ESPN's foolish fight with the technology powerhouse, they've just given the 800-pound gorilla every reason it needs to pull a King Kong and simply smash the House of the Mouse the next time broadcasting rights come up for bid.
Today, YouTube TV needs ESPN for sports content, primarily the NFL, college football, and the NBA. ESPN is a necessary evil for YouTube TV, and if the two entities could maintain a healthy partnership then the cost was probably worth it. But ESPN chose to go nuclear on YouTube TV in the name of a $30-per-month subscription app.
YouTube TV should no longer view ESPN as a necessary evil. Going forward, YouTube TV and Alphabet will view ESPN and Disney as an enemy and an existential threat. And the Googles of the world don't take kindly to enemies and existential threats.
They don't tolerate them. They destroy them.
And that's exactly what YouTube TV and Alphabet should do to ESPN and Disney the next time contract negotiations come up for the NFL, college football, and the NBA. Why pay ESPN for live sports content when you can just own it yourself?
YouTube TV should simply outbid ESPN for sports rights
ESPN holds the rights to NFL, college football, and NBA deals into the early-to-mid 2030s. Those three contracts are the only properties keeping ESPN as a viable business. Without them, ESPN has nothing to offer sports fans, BYU or otherwise. And while contracts going into the 2030s may seem like a long time to us as consumers, it's par for the course for behemoths like Alphabet that operate on 5-year and 10-year business plans.
YouTube TV never again wants to go through the current pain ESPN is causing them. Their finances, subscriber base, and reputation is suffering right now. YouTube TV will also never walk away from its live-TV business model. Live sporting events are about the only property on television that require "must watch" live content. The rights to these properties are extremely limited and extremely valuable.
Alphabet should be setting aside billions of dollars starting today to simply outbid ESPN/Disney when their rights to the NFL, college football, and the NBA expire over the next decade.
And if YouTube TV's parent company pursues this strategy, there is essentially nothing ESPN/Disney can do about it.
Alphabet has $98 billion in cash on hand, delivered $100 billion in earnings last year, and its stock is surging. Disney has $5.4 billion in cash on hand, delivered less than $1 billion in earnings last year, and its stock price is down double-digits over the last five years despite operating in one of the hottest bull markets in recent history.
ESPN/Disney trying out outbid YouTube TV/Alphabet in future sports rights negotiations would be like a middle-class, married dad trying out outbid a multi-millionaire playboy for a vintage, extremely rare Mickey Mantle card on eBay.
The middle-class dad has a budget, a mortgage, and a pragmatic wife (i.e. angry shareholders) who needs to sign-off on big purchases. The multi-millionaire made hundreds of millions after selling a business he started, has wisely invested that money for years, paid cash for his mansion, lives off his capital gains, and has no budget constraints. They are both willing to spend whatever they can respectively afford to buy this scarce Mickey Mantle card that might not come up for auction again for another decade.
As the middle-class dad signs in to eBay and nervously increases his bid by $100 for the Mantle card, the multi-millionaire immediately raises his bid by $1,000. Not only that, the multi-millionaire discovers the person he's bidding against is the same guy who once filed a frivolous slip-and-fall law suit against his company. Dealing with the lawsuit introduced significant reputational risk, business disruptions, and added costs until it was resolved. Now it's personal. The wealthy bidder not only wants the card, he also wants to crush the dude he's bidding against in the process, even bankrupting him, if possible.
The middle-class dad swallows hard and raises his bid by $50. In response, the multi-millionaire smiles and casually raises his bid by another $1,500. The middle-class dad consults with his wife, cashes in his Christmas and birthday presents early, and raises the bid by another $25. This time the multi-millionaire smirks and drops another $2,000 on the card, just daring his adversary to go into debt to increase his bid. For every $10 dollars "Mr. Slip-and-Fall" raises the auction, the multi-millionaire is willing to go up by $1,000.
After winning the auction, the multi-millionaire then heads out for a two-week vacation to his rental property in Turks and Caicos. He's delighted to own the Mickey Mantle, and crushing his adversary in the process makes winning the bid all the sweeter.
When negotiations for sports right open back up in the 2030s, we're going to see this eBay example play out in real time between two corporate entities that are headed in very different directions.
Is this the beginning of the end for ESPN?
ESPN now represents an existential threat to YouTube TV.
YouTube can, and should, retaliate in kind to protect its own brand and business model. That's how business works. Corporations work in harmony with partners who add value in helping them accomplish their business strategies, profitably grow their business, and deliver on their promises to Wall Street.
When partners become adversaries and impede a company's ability to deliver on its strategies and commitments, there is no alternative but to eliminate that threat, if possible.
ESPN has created an enemy in one of the most profitable, powerful corporate entitles in the history of the world.
If ESPN loses the NFL, college football, and the NBA, it ceases to exist. There are essentially no "ESPN viewers" anymore. Unless people are stuck in an airport or at a sports bar, almost no sports fans regularly tune in to ESPN's studio shows. Most sports fans view ESPN the same way YouTube TV does - as a necessary evil to watch their favorite teams' games. If ESPN ceased to exist, few sports fans would care as long as live sports were available on another carrier, like, oh, I don't know, YouTube TV. As for me, I don't care which network broadcasts BYU sports as long as I can reasonably afford the monthly cost to watch it.
Again: Without live sports, ESPN ceases to exist. ESPN/Disney just went to war with YouTube TV/Alphabet over live sports.
In the long run, this is going to play out like a dad with bills and a budget (ESPN) bidding on eBay for a rare Mickey Mantle against a vindictive multi-millionaire playboy (YouTube TV). And if that's the final outcome, ESPN ceases to exist.
ESPN will have ultimately written and signed its own death warrant, all in the name of trying to wring out another $30 per month on its newfangled app.