Forget all the talk about how much people hate their cable and satellite companies, and want to cut the cord. Pay TV is “probably the best bargain in entertainment today” and doesn’t have a big problem appealing to consumers, Disney CFO Jay Rasulo told an investor gathering today. Disney was thinking offensively, then, when it cut a deal to provide its channels to a low cost Internet service Dish Network plans to offer with some, but not all, pay TV services. It isn’t designed to keep potential cord cutters in the fold. “This is a product that’s basically targeted at the 7M+ cord nevers and millennials” who can’t afford a full pay TV bundle yet and want an “opportunity to sample what is part of the great value of being a subscriber in the [pay TV] system….They are talking to people who can’t make that jump but want to be in the system. I don’t think the [pay TV] ecosystem has a problem.”
Kenny Mayne To Exit ESPN, Calling Himself A "Salary Cap Casualty"
Don’t people resent paying for channels that they don’t watch? “That may be true,” Rasulo says. “But people are all different so it’s easy to make sweeping statements. You don’t watch them, but the guy next door does….The cost of a monthly MVPD subscription is still an incredible value.”
Ah, but aren’t the fast rising prices for sports channels led by ESPN driving consumer rate hikes? Not necessarily. “Sports is still something you’re not going to buy on a library basis,” the CFO says. And despite complaints about pricing from cable and satellite distributors, sports “drive advertisers, drive consumers, drive distributors.” ESPN “comes out in the top for value….It really is the driver behind what is a successful and powerful system.” If we move to an a la carte payment system, then, “you may end up with less channels and not a lot different costs.”
While defending pay TV, Rasulo also talked up Disney’s recent acquisition of online video company Maker Studios. “A lot of millennial eyeballs spend a lot of time on YouTube,” he says. Disney’s content producers found that making short form video was “not completely natural so it made sense to acquire a company that’s very good at this.” Although Maker has its own online platform, it’s still mostly known for its YouTube offerings — where ad sales are split with Google. Even so, “that advertising pie is vast” and YouTube “is starting to say the right things and do the right things with advertisers.”
Subscribe to Deadline Breaking News Alerts and keep your inbox happy.