Can ESPN's New Chief Stem Subscriber Losses and Grow Digital?

ESPN_Chalkboard - iStock - H 2018
Steve Mack/Getty Images; Courtesy of Disney/ESPN; iStock

Jimmy Pitaro will be tasked with monetizing streaming offerings as the Disney-owned cable powerhouse was caught "flat-footed" amid a transition from cable to over-the-top

ESPN's pick of Jimmy Pitaro — a savvy, Silicon Valley-connected executive with experience navigating the digital landscape — as its new president is a clear sign of the Walt Disney Co.'s priorities for the sports behemoth. And it's one that Disney CEO Bob Iger likely hopes will calm investors as Pitaro, 48, gets to work on reimagining ESPN for the over-the-top universe.

The move was greeted with enthusiasm at ESPN's Bristol, Connecticut, headquarters, where Pitaro had his first meeting with direct reports March 7, sources say. Iger had previously attempted to insert Pitaro as former president John Skipper's No. 2, but Skipper rebuffed the move.

Pitaro's first order of business will be the April launch of ESPN Plus, the company's direct-to-consumer offering powered by BamTech, the MLB Advanced Media tech company in which Disney owns a 75 percent, $2.6 billion stake. The offering, with a monthly fee of $4.99, will stream more than 10,000 live events annually. It will not feature marquee leagues including the NFL and the NBA, and as such many analysts view it as a pure niche offering.

"ESPN got very fat," notes Daniel Ives, head of technology research at GBH Insights. "It was built on heavy advertising sales and subscription fees, and that has since thinned. Their OTT strategy was nonexistent. So they were caught flat-footed."

ESPN is far from the only legacy media company playing catch-up amid digital disruption. But the company has much more at stake than many. ESPN subscriber losses (the network is in close to 87 million homes today, down from more than 100 million in 2011) and escalating rights fees have been a drag on Disney's stock price, which has fallen 7 percent in the past year. However, ESPN still is a major profit driver for Disney Media Networks, which took in $23.5 billion in revenue and $6.9 billion in operating profit for the fiscal year that ended last September.

Pitaro's ascension comes as Disney is in the midst of regulatory approval of a proposed $52.4 billion acquisition of most of 21st Century Fox's assets, including its regional sports networks. If the deal is approved by the Trump administration's Justice Department — and all signs are that it will be, despite the potential loss of thousands of jobs — Disney also will gain a controlling interest in Hulu.

On March 5, Iger noted Pitaro's career at "the intersection of technology, sports and media." (Prior to joining Disney in 2010, Pitaro spent a decade at Yahoo Media, where he ran online operations.) "ESPN's biggest challenge has been the transition to OTT," adds Ives. "If you look at Jimmy's background in the digital media and streaming world, he was a no-brainer choice."

This story first appeared in the March 7 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.