ESPN without cable: Will it eat its own viewers?

ESPN wants to have its cake and eat it, too.

For the first time, the Disney-owned sports network will soon be available outside of a typical cable or satellite package. Dish Network announced Monday it will offer a $20-per month Internet-TV package called Sling including ESPN, several other Disney-owned networks, Time Warner's TBS and TNT, along with Scripps Networks Interactive's Food Network and HGTV.

ESPN broadcasters talk on the set at Heinz Field before an NFL football game.
Gene Puskar | AP
ESPN broadcasters talk on the set at Heinz Field before an NFL football game.

The big question is whether Disney can collect the additional revenue without losing valuable customers who currently watch ESPN on regular TV packages. ESPN generated $6.04 per subscriber per month in carriage fees in 2014, or $7 billion for the full year, according to SNL Financial. That's more than four times the amount for TNT, the second-most expensive network.

That income could be at risk if there are enough die-hard sports fans who mainly subscribe to cable only because they want to get ESPN. The package won't include local broadcast networks that carry major NFL games, but it's simple enough to get a high-definition antenna and pick those up for free.

Read MoreDish's launches $20 over-the-top TV service

Both ESPN and Dish contend that they are targeting the 12 million homes that have broadband Internet but no traditional pay-TV packages. "We think we can find a sweet spot of target consumers," a Dish spokesman said. For its part, Disney said "this will support the overall multichannel subscription model, while offering viewers yet another way to access Disney and ESPN content."

Indeed, ESPN and Dish appear to have taken careful steps to prevent the loss of valuable cable subscribers. A person familiar with the matter pointed out that the service will have a "single stream" policy that prevents different people in the same household from watching different channels. That limitation alone will likely prevent many homes from being tempted to "cut the cord." The restriction "makes the service completely unusable in a multi-TV household," said Todd Juenger, an analyst at Sanford C. Bernstein.

ESPN in Dish's new web TV service
ESPN in Dish's new web TV service   

There are many potential ESPN viewers who have been unable to afford expensive cable packages after the economic crisis. While there are some inexpensive "slim" cable packages, they often don't include ESPN, and the new Dish service could attract those viewers.

It will also be tough for Dish to keep the price of the service much lower than a regular cable package. A person familiar with the matter said that Dish is paying at least as much in carriage fees for the channels as it would under a traditional distribution deal. And a decent broadband connection can easily cost $50 a month or more, meaning the total cost will add up quickly.

It's also a bit tricky to get the new Dish service onto a TV. Users will need to purchase a device such as Amazon's Fire TV or a Microsoft Xbox One to pipe the Dish service onto a traditional screen.

Even so, it appears that other cable and satellite companies aren't thrilled about Dish's experiment. Disney has offered a similar Internet service to all of them and none have bitten, according to a person familiar with the matter.