Why ESPN chief Jimmy Pitaro held back on streaming — until now

Business Insider

8 hours ago

A decade ago, HBO broke from cable and started letting people subscribe to the service online. Most of the industry followed suit —just as the cable industry started to collapse.
But Disney's ESPN has been the most important holdout. Up until this week, if you wanted to watch the country's most popular sports network — one stocked with must-see sports — you needed some kind of pay TV subscription.
Now that is changing. On Thursday, you'll be able to stream ESPN and its related channels for $30 a month without paying for anything else.
What took so long? It's pretty simple, says Jimmy Pitaro, who has been running ESPN since 2018: ESPN and its owner, Disney, wanted to keep its pay TV business intact as long as it could.
Now, Pitaro is trying to do two things at once: attract new, cable-less sports fans to his streaming service while keeping the people who are still watching ESPN via a cable TV bundle in place. (Fox Corp. CEO Lachlan Murdoch is trying to do the same thing with his new streamer, too.)
I talked to Pitaro about the challenges facing the new service — which is launching with a revamped app and promising all kinds of interactive bells and whistles — at Disney's new Manhattan headquarters this week. I was also curious about ESPN's embrace of sports betting and how the company is thinking about diversity in the Trump 2.0 era.
You can hear our entire conversation, which also gets pretty deep in the weeds on topics like his new NFL deal, as well as moves to import programming from the likes of Pat McAfee, over on my Channels podcast. Here's an edited excerpt:
Peter Kafka: This week you're launching your new streaming service, so people can subscribe to ESPN without paying for other cable channels. But you'd also like people who are still paying for cable to keep doing that, instead of dropping it and getting ESPN directly from you. How do you navigate that?
Jimmy Pitaro: The cable and satellite TV business has been very good to us. It's been very good to The Walt Disney Company. And when we went into this and ultimately decided we were going to go direct to consumer a few years ago, we recognized internally that it would not serve us to incentivize people to cut the cord.
Why not?
Because it's a great business model.
Do you make more money selling ESPN through a cable bundle than you would selling to me directly?
Let me back up here. There are pros and cons to having a subscriber access ESPN through the traditional ecosystem and having a subscriber access ESPN directly.
If you access us directly, the biggest problem we are going to have is churn. If you go back to the [traditional TV] ecosystem, you don't have as much of a churn problem.
It's really easy for me to turn a streaming service on or off. It's much harder for me to do it with cable.
Correct. So while we are charging $29.99 for a subscription to ESPN, standalone, and that's a high price point, we still think there's value there. Significant value.
But the concern is the churn will be greater than what we're seeing in the traditional ecosystem. So you weigh the pros and cons. And where we net out is we're actually somewhat agnostic in terms of how Peter Kafka is accessing ESPN, whether it's through DirecTV or Charter, or through Hulu Live or YouTube TV or directly [from ESPN].
You've been talking about doing this internally for years. Ten years ago, Disney CEO Bob Iger freaked everyone out by acknowledging that ESPN was losing subscribers, and people have been asking you to go direct since then. What prompted you to do it now?
It was really a few years ago, when we saw [cable TV] declines being in the neighborhood of eight or 9%.
And not stopping.
Yeah. Our research did not indicate it was going to slow down anytime soon.
You've been doing a lot of deals to add more sports, like the NFL deal you announced last week. But you can't have all the sports. How is a consumer supposed to navigate a world where some NFL games are on one app and others are on different ones?
So this is fascinating. We have a really talented research department, and one of the things that we've seen is that younger sports fans do not have any issue with having multiple apps.
They know how to switch apps.
That's how they grew up, bouncing from app to app.
So the issues that you and I might have, they don't seem to be present with my teenagers, for example.
Disney historically wanted nothing to do with gambling. Now you've embraced it. You guys have a branded ESPN sportsbook. But there's also pushback against the sports betting boom from people who say it's poorly regulated, and that we're starting to see harm from it, especially with young men. Is there anything that gives you pause or makes you consider tapping the brakes — maybe you'll allow it, but make it harder to do, add more friction to it?
If you look at our research, what you'll see is that sports fans today see sports betting as a part of the fan experience. Our mission is to serve the sports fan.
And it would be very hard for ESPN today to serve the sports fan without providing substantial, meaningful betting content and a frictionless — or somewhat frictionless — experience around placing a bet.
We are not a book. We do not take people's money. But we partnered with Penn Entertainment to create ESPN Bet, and we get paid an annual license fee for our brand. We obviously promote it significantly and we integrate it into our programming. [Our new app] will have a significant sports betting tab that we're excited about, that we think is needle-moving.
We have not really received any negative feedback on our offering.
You have kids. Do they bet on sports?
My kids do not. But I'm on college campuses all the time, and it's everywhere. You're surrounded by it.
Does that concern you?
Look. What I've experienced — and I don't want to be naive here — but from my limited experience, what I see is people making small bets.
Obviously, I understand that there are many problem cases. We partner with an enterprise that is making this a priority — offers thoughtful PSAs; has the technology to identify problem bettors and cut them off; makes help available to them.
The Penn deal seems like it's not working for them, based on what they've said in their public commentary. You guys have an out next year. The real leaders in sports betting remain DraftKings and FanDuel. Do you imagine that you'll look for a different provider next year?
The opt-out you mentioned is mutual. So they have it, we have it. It's next summer. The good news here is that we're launching an enhanced app that includes significant betting integration, and we believe ESPN BET is going to benefit from that.
So let's see if we can improve market share with this launch. And we will evaluate things at the end of football season.
I was looking at an interview I did with you in 2019. I was asking about a change in programming from your predecessor, and you made a point of saying, "Diversity is very important for us," which was a sort of standard thing to say then. It wasn't considered controversial.
In 2025, with the Trump administration, saying you're for diversity can be a trigger. The FCC held up the Paramount/Skydance deal, in part, because it wanted Paramount to get rid of its DEI program. Are you considering making changes within ESPN to accommodate the new political reality?
When we talk about our priorities, we talk about direct-to-consumer quality, storytelling, innovation, and audience expansion. And if you were to walk the halls of any of our offices and ask our employees what our priorities are, I believe they would be able to rattle those four off.
I also believe that most, if not all, of our employees would start with audience expansion. It's one of the things that has kept me up at night in this job, from the day I got it.
I know that ESPN resonates with someone like me, someone my age, someone who's a hardcore sports fan. How do we make ESPN resonate with, for example, younger people, with the casual sports fan, with women?
That's the opportunity for ESPN to expand and grow. And as a part of that, I believe that we need a workforce that reflects the audiences that we're trying to reach.
Is "diversity" a word you guys can use in Bristol [Connecticut, where ESPN is headquartered]?
I would say the words that we're using are "audience expansion."