Summary:

UPDATE: the company officially announced closure… more details in the follow-up post, here.
Exclusive: [by Rafat Ali & Staci Kramer] We ha…

UPDATE: the company officially announced closure… more details in the follow-up post, here.
Exclusive
: [by Rafat Ali & Staci Kramer] We have heard from numerous sources that MobileESPN, the ambitious yet doomed MVNO effort from Disney, is in for a big change this week: either a phased winding down/transition, or getting sold, right before the end of Disney’s fiscal year. Reached this evening, a spokeswoman for Mobile ESPN said an announcement is forthcoming but she would not confirm or provide any details beyond telling us that contrary to what we had heard about an immediate complete staff layoff, the company was not laying off all MobileESPN employees this week. MobileESPN has about 100 employees.
Whatever the announcement — which we expect Thursday — it is unlikely to be an instant cessation of service. MobileESPN phones should continue to work. Most likely, the service will be transitioned with backbone provider Sprint as the likely candidate.
If it is sold, then we know from a couple of sources who looked at buying the service that they were looking in the $300 million-$400 million range, though have no way of confirming whether that was the final price, if at all.
This comes only eight months after the service, separate from ESPN’S mobile wireless licensing business, officially launched amidst big hoopla at the Super Bowl this year. A lot has changed since then, with the sentiment for MVNOs swinging like a schizophrenic off medication. The other two major MVNOs in the US market, Amp’d Mobile and Helio had been reporting or indicating some good traction in the last few months, even though the general investor sentiment is still pretty down, as was clear during the CTIA show two weeks ago in LA. It is too soon to tell with Disney Mobile, the family-oriented MVNO that has taken a different strategic approach. One industry insider told us tonight he expects a backlash against mobile content and MVNOs if Mobile ESPN shuts down.
Merrill Lynch analysts Jessica Reif Cohen and Michael Kopelman wrote in a research note in July asking the parent company Disney to pull the plug on the MVNO. They estimated that MobileESPN would have lured a mere 30,000 subscribers over the course of this financial year, well below their original estimate of 240,000. Along with the losses generated by a second Disney-branded phone service, ML expects that the Mouse will lose $135 million on its experiment in FY06.
Earlier last month in Disney’s Q3 earnings call, CEO Bob Iger acknowledged the problems: “Our investment in ’06 was approximately $150 million. We’re not going to get specific at all about ’07. What we know is that ESPN works on the platform in that the product itself and the experience for the consumer is quite positive. So ESPN’s presence in mobile platforms is a given into the future…Under what circumstance or in what model, it’s really too soon to tell.” Guess we have learned that “soon” is a relative word in these circles.

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