From the Wall Street Journal:
The company, majority owned by Walt Disney Co., has lost 3.2 million subscribers in a little over a year, according to Nielsen data, as people have cut the cord by dropping their cable-TV subscriptions or downgraded to cheaper, slimmed-down TV packages devoid of expensive sports channels like ESPN.
ESPN sees talent as one area where it can control its costs, and it has been taking a hard line in negotiations.
On Wednesday, the company said it was parting ways with star host Keith Olbermann. That followed the exit in May of Bill Simmons, another big name. While Mr. Olbermanns tendency to make controversial statements sometimes landed him in hot water with ESPN and some of its business partners, including the National Football League, the decision was a financial one, a person with knowledge of the decision said.
Since July 2011, ESPNs reach into American homes has dropped 7.2%, from more than 100 million householdsroughly the size of the total U.S. pay-TV marketto 92.9 million households, according to Nielsen data.
The financial stakes are especially high for ESPN because it earns the most carriage fees of any TV channel, about $6.61 a month per subscriber, according to SNL Kagan.
If ESPN offers its channel as a direct-to-consumer streaming service, some pay-TV operators have the contractual right to boot ESPN out of their most widely-sold channel packages and sell it a la carte, according to people familiar with the matter.
ESPN would have to charge about $30 a month per customer in an over-the-top offering to make the same money using that model, analysts say. But those distributors would have the right to undercut ESPN in their retail pricing, the people said.