Disney's Iger: ESPN will eventually go a la carte, but not in the next 5 years

Walt Disney Company CEO Bog Iger said his company's highly profitable ESPN unit will eventually go a la carte as pay-TV's bundling infrastructure gives way. But that decision is still more than five years away, he added. 

disney bob iger

Iger

"If we end up seeing more erosion in the so-called multichannel bundle, quality will win out," Iger told CNBC's Squawk Box. "While the business model may face challenges over the next few years, long term for ESPN … they'll be fine."

ESPN is already seeing a decline in its user base: The national sports network has lost 7.2 percent of its pay-TV base since 2011, and now counts around 93 million subs.

The costs for its programming, meanwhile, are rising faster than anywhere in the pay-TV ecosystem. ESPN is paying around $2 billion a year to the NFL just to show Monday Night Football, for example, and another $1.7 billion a season to present NBA games.

Meanwhile, ESPN charges $6.61 per subscriber, on average, making it far and away the most expensive programming network to license, among both broadcast and cable channels.

Analysts say that ESPN would have to charge each of its subscribers as much as $36.30 each in an a la carte model in order to cover all of its expenses.

ESPN has been tentatively dabbling in the OTT market lately. Dish Network's Sling TV offers ESPN as part of a handful of cable channels delivered OTT for $20 per month as a base tier. Conversely, ESPN has sued Verizon for not including the channel in the telco's own Custom TV skinny bundle--Verizon said that more than a third of its new FiOS customers in the second quarter selected that Custom TV bundle.

Asked about a la carte pricing, Iger told Squawk Box that any discussion "would be conjecture at this point."

For more:
- read this CNBC story
- read this story from The Verge

Related articles:
ESPN has lost 3.2M subs in the past year; could pull itself off Sling TV
Only 36% of consumers would add ESPN to their personal a la carte bundle, Digitalsmiths study says
ESPN will cost $36.30 per sub in a la carte world priced by 'reach', analyst says
Disney's Iger: ESPN not going a la carte

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