What makes ESPN unique among cable networks is the extremely high fees it charges distributors to offer the channel to customers. While that high price can be attributed to unique costs related to sports programming, it has also made the channel a target in slimmed down cable packages that aim to offer cheaper bundles with more personalized options.
Much of the network's revenue is estimated to come from those subscriber fees, and that revenue was down in the fiscal fourth quarter of 2016 despite higher contractual rates, according to the company's earnings call in November. Despite calls for Disney to sell the sports channel, CEO Robert Iger has expressed optimism about the property's future.
"We have taken a more bullish position on the future of ESPN's sub base," Iger said on the November conference call. "We think that while we were candid a year ago on sub losses, we believe that, to some extent, the causes of those losses have abated, notably the migration to smaller packages."
Disney has also challenged Nielsen's recent figures, which don't count subscribers on growing digital services like Sling or PlayStation Vue. Nielsen reviewed the data but stood firm behind its estimates. In a statement to CNBC, a ESPN spokesperson said that "no one is navigating change better than Disney and ESPN."
As of November, the channel's average Nielsen viewership numbers for the year (viewers aged 18 to 49) showed a drop of about 10 percent. Again, that's not outstandingly bad — about a quarter of channels did worse than that, and ESPN is still the No. 1 network — but it looks bad when you're charging $7.21 per month per subscriber. That's nearly four times more than the next most expensive channel, TNT at $1.82.
If viewers aren't committed to sports coverage, there are plenty of cheaper options for distributors to choose from.