Smash Notes

Back to Disney: The Renaissance and the Empire.

Why Do Cable Companies Pay ESPN?

Ben Gilbert and David Rosenthal say ESPN invented a second revenue line for cable networks: the affiliate fee. Before ESPN, channels showed up in the bundle and lived on advertising, and some startup networks even paid operators to be carried.

ESPN was buying sports rights and asked cable companies for cents per viewer so it could afford those rights. Sports then became leverage. ESPN could threaten to pull NBA, MLB, NFL, or SportsCenter, and angry subscribers would show up at the cable company. The fee climbed from a few cents to $1, then $2, then $5 a month. The average deal now is $9.42 per subscriber per month, by far the highest paid channel.

Transcript

Disney: The Renaissance and the Empire ·

Acquired

More from this episode

  1. Can Disney Beat the Innovator's Dilemma?Ben Gilbert and David Rosenthal ask whether Disney can fight the innovator's dilemma and win.
  2. Why Was Disney Worth More Dead Than Alive in 1984?Ben Gilbert and David Rosenthal say Disney in 1983 was worth more sold for parts than run as a company.
  3. Where Did Future Filmmakers Learn Disney Animation?David Rosenthal says Disney animation was floundering while future filmmakers learned the craft of Disney animation in a small basement room at the California…
  4. When Was Disney's 1984 Boardroom Coup?Ben Gilbert and David Rosenthal place Disney's boardroom coup on September 7th, 1984. Roy E.
  5. Why Did Eisner and Wells Raise Disney Park Prices?Ben Gilbert and David Rosenthal say Michael Eisner and Frank Wells raised ticket and parking prices at Disneyland and Disney World because those prices had…
  6. Why Did Disney Cartoons Become Broadway Musicals?Ben Gilbert and David Rosenthal say Jeffrey Katzenberg turned Disney cartoons into Broadway musicals that happened to be animated, and that switch made the…
  7. How Did Beauty and the Beast Bring Disney Animation Back?Ben Gilbert and David Rosenthal say Beauty and the Beast lit up the box office and showed Disney Animation was back.
  8. Why Did Disney Put Its Classics on VHS?Ben Gilbert and David Rosenthal say that until 1985 there was no way to watch a Disney film outside a theater.
  9. How Much Has the Lion King Musical Made?David Rosenthal says the Lion King musical has grossed over $11 billion in total revenue, and calls the run the single highest grossing entertainment product…
  10. Why Did Euro Disney Lose Money for Years?Ben Gilbert and David Rosenthal say Euro Disney cost $4 billion to develop and lost money for years.
  11. How Did Frank Wells Die?David Rosenthal says Frank Wells was killed in a helicopter crash while heliskiing on Easter Sunday, 1994, the first of three huge blows that hit Disney in…
  12. How Did DreamWorks Compete With Disney?Ben Gilbert and David Rosenthal describe DreamWorks, with Steven Spielberg and David Geffen, as a full-stack Disney competitor.
  13. How Much of Disney Profit Came From Cable?Ben Gilbert says Disney's cable networks segment accounted for 60% of the entire company's operating income from 2008 to 2011, and analysts believe three…
  14. Why Did Michael Eisner Turn Down AOL?Ben Gilbert and David Rosenthal say one of the best things Michael Eisner did as CEO of the Walt Disney Company, other than buying ESPN, was the deal he…
  15. What Book Does the Save Disney Campaign Open With?Ben Gilbert reads from Ride of a Lifetime, Bob Iger's book, as the Save Disney campaign begins. The resignation letter was a blistering three-page critique.
  16. Why Did Comcast Try to Buy Disney?Ben Gilbert and David Rosenthal say Comcast, the Philadelphia cable company, made a hostile bid to buy Disney for $54 billion in Comcast stock.
  17. How Did Bob Iger Win the Disney CEO Job?Ben Gilbert and David Rosenthal say Bob Iger won by refusing to defend the past.
  18. Why Did Bob Iger Lose Faith in Disney Animation?Ben Gilbert says Bob Iger, during his CEO audition process, had completely lost faith that Disney animation can be fixed from within.
  19. Why Did George Lucas Sell the Group That Became Pixar?Ben Gilbert and David Rosenthal say George Lucas sold the graphics group because he was getting divorced and needed cash.
  20. Why Do Toy Story Animators Move the Body First?Ben Gilbert says Toy Story animators work frame by frame on the bodies first and only later on the faces.
  21. How Long Did Each Toy Story Frame Take to Render?Ben Gilbert says each frame of Toy Story took an hour or two to render, and Pixar could render only three and a half minutes of footage per week.
  22. Why Did Michael Eisner Want Finding Nemo to Fail?David Rosenthal says Michael Eisner wanted Finding Nemo to fail because a flop would give Disney more negotiating leverage over Pixar.
  23. Why Did Disney's Board Approve Buying Pixar?The Disney board forgot to say no because buying Pixar was unthinkable.
  24. Was Disney's Pixar Acquisition a Success?Ben Gilbert says the Pixar acquisition, twenty years on, is an obvious giant success. The first reason is that it clearly saved Disney Animation.
  25. What Is Disney's Biggest Bet?Ben Gilbert says Disney+ is the biggest strategic bet Disney has made in the last decade. All of the chips are on Disney+ for the future of Disney.
  26. Why Did Disney Buy Marvel for $4 Billion?Ben Gilbert and David Rosenthal say Disney bought Marvel in 2009 for $4 billion, and the price looked contrarian.
  27. Why Did Disney Buy Lucasfilm?Ben Gilbert and David Rosenthal say Disney bought Lucasfilm in 2012 for another $4 billion, the same kind of bet as Marvel.
  28. How Did ESPN Pay for Pixar, Marvel, and Lucasfilm?Ben Gilbert and David Rosenthal say ESPN paid for Pixar, Marvel, and Lucasfilm.
  29. Why Did Disney Pull Its Movies Off Netflix?Ben Gilbert and David Rosenthal say Disney announced an ESPN streaming service for 2018 and a Disney streaming service for 2019, and in the same announcement…
  30. How Much Did Disney Really Pay for Fox?David Rosenthal says the real price of the Fox assets Disney kept was about $44 billion.
  31. Why Did Disney Plus Open the Disney Vault?Ben Gilbert and David Rosenthal say Disney Plus opened the Disney Vault.
  32. Why Did Ben Gilbert Doubt Disney Plus?David Rosenthal quotes Ben Gilbert from the end of Acquired's 2019 Disney Plus episode, where Gilbert's one reason to doubt Disney Plus was that he thought…
  33. How Fast Did Disney Plus Reach 100 Million Subscribers?David Rosenthal says Disney Plus reached 100 million subscribers in 16 months.
  34. How Many People Visit Disney Parks Each Year?Ben Gilbert says 145 million people visit the Disney parks each year.
  35. Why Do Disney Parks Need a Streaming Service?Ben Gilbert argues that Disney parks need a widely available streaming service because it is the only way to put franchises like Encanto in front of the…
  36. Will Marvel, Pixar, and Star Wars Keep Fueling Disney?Ben Gilbert and David Rosenthal split on how long Marvel, Pixar, and Lucasfilm can keep feeding Disney.

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