Disney (NYSE:DIS) should pull the plug on all live ESPN live news and talk shows. Such a move would help the nation in the short-run and DIS stock in the long-run.
In a column published on March 26, I strongly urged Comcast’s (NASDAQ:CMCSA) NBC News to shut down its live shows or at least broadcast many fewer of them. Among the reasons I cited for my position were the fact that NBC News’ headquarters are located in New York City, (the epicenter of the novel coronavirus outbreak in the U.S.) and the lack of necessity of live TV news. I also contended that shutting down live TV news shows would increase Americans’ loyalty to NBC and potentially to Comcast as well.
All of those points are also relevant to ESPN and Disney.
ESPN’s headquarters are not located in New York, but in Bristol, Connecticut. Bristol, however, is less than a 90-minute drive from New Rochelle, NY, which is certainly a coronavirus hotspot. It’s very possible that some of ESPN’s employees live in or close to New Rochelle and are transmitting the coronavirus from their neighborhoods to Connecticut. As of March 29, Connecticut had more than 1,500 cases of coronavirus. From Connecticut, the virus could easily be spread to other parts of New England.
Importantly, as I noted in my article on Comcast, live TV is a very labor-intensive endeavor, requiring technicians, directors, associate producers, camera operators and makeup artists. So it’s likely that ESPN, which has many live news and live talk shows per day, employs hundreds of people to work on those shows.
Sports News Is Not Essential
This should probably go without saying, but sports news is not, by any stretch of the imagination, an essential service. That would be true even if any of the popular professional or college sports were active. But in fact, none of them are playing any games, making ESPN’s shows totally unimportant.
And, as I pointed out in the column on Comcast, there are many, much less labor-intensive methods that can be used to convey information than live TV news. Among these methods are Skype, conventional radio, websites, Twitter’s (NASDAQ:TWTR) social media platform and SiriusXM’s (NASDAQ:SIRI) satellite radio.
ESPN Is Still Doing a Ton of Live Programming
But despite these points, ESPN still appears to be broadcasting many live news shows and live talk shows. On Monday, March 30, for example, ESPN was, as of March 29, slated to show 16 editions of SportsCenter, a sports news show (although some of those could be reruns of previous shows that were also filmed on March 30). ESPN was also scheduled to broadcast multiple talk shows on March 30, including The Dan Le Batard Show With Stugotz, The Paul Finebaum Show and The Will Cain Show.
Since the middle of March, ESPN has planned to keep broadcasting live news shows and live talk shows. On March 17, a network executive said that the network would “continue to cover the active sports world.”
Shutdown of ESPN Live TV Would Help DIS Stock
Like Comcast, Disney is facing very harsh challenges in the cord-cutting era. Millions of Americans are abandoning cable TV, causing ESPN, Disney’s most profitable asset, to lose a great deal of its revenue.
During the cord-cutting era, in order to maintain its television revenue, Disney will have to try to convince consumers to subscribe to its streaming offerings. If it shuts down ESPN’s live programming and advertises the fact that ESPN is owned by Disney, appreciative Americans would be much more likely to subscribe to Disney’s streaming channels. In such a scenario, attendance at the company’s parks and movies could spike as well.
I remember that after Ford (NYSE:F) was the only American automaker to survive without a government bailout following the financial crisis, its sales (and Ford stock) rose meaningfully. The company’s sales jumped because appreciative, patriotic Americans bought its vehicles. If Disney pulls the plug on ESPN’s live programming, Disney’s sales and DIS stock would likely get a similar bump.
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer. As of this writing, he did not hold a position in any of the aforementioned securities.