ESPN isn’t the only Disney-owned network concerned about falling subscriptions. According to the Wall Street Journal, youth-skewing networks Disney Channel and Freeform are losing viewers as well. In fact, estimates suggest both channels have lost around four million subscribers in the past three years, bringing them to about 90 million each. Obviously that’s still a massive number, but it’s a concerning trend in the face of competition from YouTube, Netflix, and other outlets that may be pulling children and teens from away from their TVs. As Disney Channel President Gary Marsh told the Journal, “We see the migration. One of the challenges is trying to serve the viewership where they’re going as opposed to trying to drive them where we want them to go.”
Another potential reason for the fall in subscriptions is the lack of a recent hit on Disney Channel. As a result, ratings in the channels’ respective demographics have been down so far this year. Luckily, this month will give Disney Channel a chance to turn that around as the film Descendants 2 and the series Raven’s Home are both debuting. Meanwhile, Freeform is hoping their first series with Marvel, Cloak and Dagger, will help increase viewership next season.
The reason analysts are so concerned about ESPN and other Disney networks is that cable channels make up the single largest chunk of Disney’s earnings. According to WSJ, it accounted for 30% of the company’s revenue and 43% of their profits in the last fiscal year. Furthermore, beyond the media content provided by these networks, it also gives Disney a chance to promote their movies, theme parks, merchandising, and more.
Naturally, with all this talk about traditional cable subscribers, the conversation turns to over-the-top and direct-to-consumer services akin to HBO Now or the WWE Network (both powered by BAMTech, which Disney has a stake in). So far, Disney has made their channels a part of various package deals but has yet to offer an a la carte option. When asked if Disney would consider a direct-to-consumer app of their own, Marsh said, “There’s no doubt in my mind that the company will pursue that.” While he declined to offer an exact timeline, he suggested an announcement could be coming in the near future.