NEW YORK ( TheStreet) -- Over the last several months a couple of things happened that might present Walt Disney's ( DIS) dominant ESPN franchise with its first real challenge.
At the turn of the new year, Versus became NBC Sports Network to reflect the changes Comcast ( CMCSA) made when it, the original owner of Versus, acquired a majority interest in NBC Universal. Television isn't the only area where ESPN might be vulnerable. However, it is more important than radio, which could take a hit. Just the other day CBS ( CBS) and Cumulus Media ( CMLS) struck a deal to partner on CBS Sports Radio. Even though the arrangement takes place in the relatively obscure confines of the radio business, it carries somewhat meaningful, albeit limited, implications. First, in some markets, CBS and Cumulus radio stations might be able to share talent. For example, one of the nation's biggest all-sports radio stations, New York City's WFAN, could simulcast some of its programming -- the Boomer Esiason and Craig Carton morning show, or Mike Francesa's afternoon show, for example -- not only on CBS radio stations across the country, but Cumulus stations as well. Second, and maybe most important, upon signing the deal with CBS Cumulus nixed its sales and marketing agreements with ESPN and will not renew distribution deals that put ESPN Radio programming on Cumulus stations. Initially CBS Sports Radio will reach fewer than half of the 24 million listeners who hear ESPN Radio. But given the relationship and competitive landscape, this could change. That's really the key, getting ears to make the switch from ESPN Radio to CBS Sports Radio. Given the relatively miniscule impact radio has on the bottom lines at Disney and CBS, this likely will not come close to changing the game. In fact, I would go so far as to say that ESPN Radio could shut down tomorrow and investors might not even notice. DIS would trade, by and large, unaffected by the noise. If CBS can ding ESPN in radio, imagine the damage NBC might be able to do in the more important area of TV. Comcast's NBC Sports Network, now a fully functional part of the NBC Sports family, could put a hurt on ESPN, and by extension Disney. A few points to consider. Business is strong at ESPN. On Disney's most recent quarterly earnings report (Transcript via Seeking Alpha), the company touted ESPN as the most-watched 24-hour cable network among 18 to 49 year olds in 2011. Advertising revenue continues to grow at ESPN, up 14% in the second quarter, year over year, and trending up in the high single digits for the current quarter. These numbers not only speak to ESPN's success, but the market opportunity that exists for premium sports coverage. It's the one area where TV as we have historically known it -- as key appointment viewing -- still reigns supreme.