Disney is exploring the possibility of selling a portion of its ownership in ESPN and seeking a strategic partner for the sports network’s transition into the streaming market, CEO Bob Iger revealed on Thursday.
According to Iger, the decline of the linear TV business has exceeded his expectations, prompting Disney to consider external partnerships to enhance an ESPN streaming service by expanding its distribution and content offerings. Specific partners have not been disclosed. Currently, Disney holds an 80% stake in ESPN, with Hearst Communications owning the remaining 20%.
While Disney has refrained from including its premium ESPN content in its ESPN+ streaming service, it has witnessed a growing number of cable subscribers canceling their subscriptions each year, indicating a shift towards digital streaming. Iger acknowledged the challenges posed by the disruption of the traditional TV model, which has been more significant than anticipated.
A broader streaming offering
Iger expressed greater certainty regarding the launch of ESPN’s complete direct-to-consumer service but did not disclose a specific timeline. His remarks about seeking a strategic partner suggest that combining ESPN with other companies’ sports content could improve its performance in the streaming space. This aligns with ESPN’s goal of becoming the go-to hub for all live sports programming through partnerships with other media companies.
ESPN has become a valuable asset in Disney’s portfolio, commanding high fees from pay-TV providers and offering popular sports programming such as “Monday Night Football.” However, in the streaming era, ESPN’s success relies on intentional sports fans subscribing to the service. This highlights the importance of maximizing the platform’s quality programming, even at higher prices compared to general entertainment streaming services.
NFL Commissioner Roger Goodell responded positively to Iger’s remarks about ESPN’s future as a direct-to-consumer platform and the potential partnership opportunities it presents. Goodell highlighted the success of the league’s exclusive deal with Amazon’s Prime Video for “Thursday Night Football” and how this influenced the latest rights agreement with ESPN.
In addition to seeking a strategic partner for ESPN, Iger expressed openness to selling or spinning off Disney’s other cable networks, including FX and NatGeo, as well as its broadcast group, ABC Networks. Disney aims to adopt an expansive approach when considering the future of these legacy assets, apart from ESPN.
Iger also confirmed Disney’s plans to acquire Comcast’s minority stake in Hulu as previously agreed upon. Amazon, Google, and Apple are potential partners for Disney, given their large balance sheets, global streaming ambitions, and ownership of sports content. These companies have already secured streaming rights to major sports events.
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