In the lead-up to Disney's investor day on Thursday, the Financial Times published this in-depth piece about the push and pull between the conglomerate's cable and streaming businesses. It's well worth reading, but the short version: Disney's money comes from cable, yet its future comes from streaming, which isn't yet profitable.

That's not a unique dynamic in TV right now. WarnerMedia, NBCUniversal and ViacomCBS are all in the same boat to varying degrees. But Disney's road ahead diverges significantly when it comes to televised sports. All of these media companies hold sports rights and control sports networks. Disney's the one that owns an entire family of them under the ESPN umbrella. And that's potentially the biggest complicating factor of all.

As the FT piece points out, ESPN's been hemorrhaging viewers for years, to the point where former CEO Bob Iger considered moving some of its premium programming to the (currently rudderless) ESPN+ platform. Yet ESPN networks (or at least one of them) remain among TV's best for ad impressions. Through the end of November, ESPN had nearly 147 billion TV ad impressions on the year according to iSpot.tv. That's seventh overall, despite the absence of live sports for months on end due to COVID.

ESPN's ad revenues (an estimated $2.6 billion so far in 2020) are one big part of its benefit to the wider Disney business. Its carriage fees -- $7.89 per subscriber per month for the entire collection of ESPN networks -- are another.

If Disney wants to move some or all ESPN cable content to ESPN+, there's an accepted loss that comes with the move early on, followed by the additional gamble that you can eventually increase the subscription price of ESPN+ (or just ESPN) as an a la carte app. FT says that number is probably $40-45 per month to break even. There's zero chance consumers will be willing to pay that much when streaming and cable bundles that include ESPN programming can cost as little as $50 or so per month.

Disney, as it's currently experiencing with testing premium movies on Disney+, has a different challenge ahead than the one it's used to on TV: Trying to force the hand of consumers. In the past when it's wanted carriage for an ESPN network, it'll push top game inventory to the new net so that MVPDs "have to" pick it up (or else risk consumers ditching their service for one that does have the channel so they can watch their team). Should they move top inventory to ESPN+ here, it's telling the consumer that they'll be directly paying Disney more to watch what they want instead -- AND potentially increasing the price to do so over time.

While Disney (like other media companies) was able to let cable providers be the bad guy with their hand out for more money in the past, the onus now shifts to the networks themselves as the new name on the bill. For sports, especially, given how much the televised properties cost (and the money they need to generate for Disney as a whole), it quickly creates some second-guessing around how much consumers actually NEED this content in their lives.

That's problematic across the board, and something the entire entainment industry is seeing right now. It's just that on top of those challenges, sports networks -- and particularly ESPN -- are also dealing with paying billions of dollars for the right to air live games that aren't worth as much as they used to be. Add in the fact that ESPN-owned properties like SEC Network, ACC Network and Longhorn Network (among others) not only don't make as much money as "big" ESPN but also need the MVPD carriage fees to survive. How do you mitigate those costs when you're likely dealing with fewer subscribers as a result of moving most/all ESPN content to an app?

That cost of transition is the biggest hurdle for ESPN right now, yet it's one ESPN is going to have to figure out soon given the continual churn of subscribers and its parent company's streaming focus. The Disney+/ESPN+/Hulu bundle was a good first step toward lumping costs together to remove hesitance around paying "that much" for sports. Of course, that's also a more manageable dollar amount of $13.99 per month.

If you start asking consumers to pay $20, $30 or $40 more than that for the full bundle, there's going to be greater hesitance and that will inevitably lead to fewer subscribers... which then forces you to charge more for the services to make up the cost. There's a point in the future where this all gets figured out by way of streaming viewing being more profitable -- by way of more valuable, addressable advertising than linear -- but that still relies on a large-scale audience shift we just haven't seen yet.

ESPN will eventually be an app that you either subscribe to or don't; this we can bet on. But the path to getting to that future could create a ton of bumps for ESPN and parent company Disney, the likes of which could actually stall out that shift. They'll figure it out, of course. The question is whether that happens because Disney/ESPN pushed the industry in that direction, or got to benefit from things eventually ending up there.