‘Writing on the Wall’ for ESPN Becoming a la Carte Service: Chapek

Disney stands by its decision to raise pricing 38% to $10.99 monthly on the ad-free Disney+ offering, effective when it debuts the ad-supported Disney+ Basic tier in December (see 2208110015), CEO Bob Chapek told a Goldman Sachs investment conference Wednesday. “I think it’s what the market will bear, which is a direct reflection of price value, and I think we are way underpriced relative to the value that we provide,” said Chapek. “We owe it to our shareholders to try to get that recognized.” Disney has “lots of data” in terms of “what consumers’ intentions are,” he said. “Suffice it to say that we think we made the right move and we are still in some cases significantly under where our competitors are, which again speaks to that introductory price that we came out at.” Disney’s “whole approach” in evolving ESPN as an a la carte streaming service available outside the traditional pay-TV bundle is to “proactively prepare for that moment” without “prematurely” or “unnecessarily” disrupting the business "that it is today,” said Chapek. “Everybody knows” that the traditional cable bundle “is deteriorating over time, and we’re preparing for the moment when the consumer tells us that they are ready for such a step,” he said. “We’ve got tremendous abilities to read the marketplace and understand when it might be time to do that.” There are “significant benefits” to Disney maintaining its cable business, “but at some point, we see the writing on the wall where this is going, and we’re preparing for that,” he said. “But we’re not going to do anything rash or harsh, and we’re going to follow the consumer.”