Disney is betting that it can help cover the cost of sports rights without losing subscribers by raising the price of its streaming service by 43%.
The cost of an annual subscription to the sports network will go from $69.99 to $99.99. The price increase is due to the growing amount of original programming on the service.
As of 11:57 a.m., Disney's shares were up as much as 3.7%.
Disney is taking a risk with the timing of its price hike as the highest US inflation in four decades is already squeezing household budgets, souring peoples view of the economy and forcing some to scale back entertainment and other discretionary spending
Media companies are under pressure to make money with their streaming ventures. After years of stagnant growth, the number of subscribers of the Disney-owned sports network has risen to 22.3 million. It isn't making money.
Disney has a bundle of streaming services. The cost of that bundle is more than the cost of the new Disney+. The bundle's price will stay the same.
There are more than a dozen live sports on the streaming service. The service will broadcast an exclusive game of the National Football League. The docuseries include "Man In The Arena: Tom Brady" and the "Places" franchise executive.
Expenses have been increasing. In the quarter that ended in April, the cost of programming and production at the unit increased by 42%. Disney's direct-to-consumer business lost more than a billion dollars in the period.
There is a growing sense among consumers that prices are out of control, as a result of the 43% price hike for the popular sports network.
Even after the increase, the service is still more affordable than other sports focused streaming services. The NBA League Pass costs $14.99 a month, while MLB.TV costs $24.99 a month.(Updates with share move in third paragraph.)