The usual version of this story says ESPN is losing its audience because it overpays for rights. Disney’s own paperwork tells a messier one: people are watching more than they have in years, and the money is still going the wrong way.
Update, October 2026: The price increase mentioned below is now in effect. ESPN’s direct-to-consumer plan went from $29.99 to $31.99 a month on September 17, per NewscastStudio and Sports Media Watch. Disney has not yet reported its fiscal fourth quarter.
The Audience Is Fine
In its August 5, 2026 shareholder letter, Disney said the quarter ended June 27 was the most-watched fiscal third quarter for ESPN, ESPN2 and ESPN on ABC since 2016, and that the 2026 NBA and NHL playoffs were the most-viewed ever on its networks. Those are company claims about particular windows, but they point in one direction. People are watching.
The Profit Is Not
In that same quarter, the Sports segment, which is the ESPN business, grew revenue 4% to $4.5 billion while programming and production costs rose 10%, to $3.05 billion from $2.76 billion. Operating income fell 17%, to $858 million from $1.037 billion.
ESPN Is Watched More and Earns Less
Disney said higher subscription and affiliate fees were more than offset by higher programming and production costs, tied to contractual rate increases, new sports rights and the timing of rights costs. The second quarter, reported on May 6, ran the same direction: operating income of $652 million, down from $687 million, which Disney attributed mainly to higher rights fees. Over nine months, operating income was $1.701 billion against $1.971 billion, a 14% decline.
Costs Outran Revenue
Not All of It Is Permanent
Disney says so itself. The NBA contract renewal shifted costs into the third quarter, and the company said the drop was steeper than its guidance of about 14% because of four-game sweeps in early playoff rounds and a carriage dispute. It still expects Sports operating income to grow in the mid-single digits for the full year, excluding a 53rd week. That is a forecast, not a result, and the fourth quarter has not been reported.
The Subscriber Squeeze
The weak link is the subscriber base, and Disney is careful with its wording. In the second quarter, affiliate fee growth came from higher rates and the NFL transaction, partially offset by fewer subscribers. Neither release sizes the shrinking linear universe. They do show the lever being pulled: in the third quarter, subscription and affiliate fees rose 8%, roughly five points from higher effective rates and four from the NFL deal, in which ESPN took over NFL Network in exchange for a 10% stake going to the league. That deal closed on February 1.
ESPN’s direct-to-consumer service launched on August 21, 2025 at $29.99 a month. Now it costs $2 more. Ratings measure who watches. The affiliate line measures who pays, and Disney’s wording says that base is shrinking while the rate per subscriber rises.
Disney CFO Hugh Johnston put the problem in one sentence on the May call, as Front Office Sports reported it: “Sports rights are expensive and can be dilutive without scale.” ESPN’s audience is not the casualty of its rights deals. The open question is whether that audience, at these prices, keeps paying for them.
VDG Sports, where Vince Douglas Gregory writes about the business and culture of sports, will keep following the money, because the ratings only tell you who showed up.
Vince Douglas Gregory is the ‘petulant puppet master’ of a sports media landscape addicted to scripted rage and performance art. As the architect of VDG Sports, he bypasses the corporate talking heads to expose the unfiltered truth behind the narratives.
An unstable thinker and astute scholar, Vince thrives on dismantling the mediocre click-bait addicts who trade reality for engagement. If you want boring stats, go elsewhere. If you want the raw reality of the game, you’re in the right place. Consider yourself warned.