Disney CEO Bob Iger is taking a unique approach to solving the challenges faced by ESPN. He has enlisted the help of former executives Kevin Mayer and Tom Staggs, who now co-lead Candle Media, a consulting firm. Known for their close relationship with Iger, Mayer and Staggs are working alongside ESPN President Jimmy Pitaro to explore strategic options for ESPN and other linear cable networks owned by Disney.
One of the main issues Iger is addressing is the increasing rate of cable cancellations in the United States. In the past, ESPN could rely on revenue growth from programming fees charged to pay TV distributors like Comcast, Charter, and DirecTV. However, this revenue stream is shrinking, posing a challenge to Disney’s overall earnings. As a result, Iger is seeking innovative ways to revitalize ESPN.
During an interview with CNBC, Iger hinted at ESPN’s plans to launch a direct-to-consumer product. Currently, ESPN’s best programming is exclusively available through the linear cable TV bundle. However, the network offers lower-rated live games on its ESPN+ streaming service, which comes at a monthly cost of $9.99. ESPN’s delayed move into the direct-to-consumer market is likely due to the potential impact it could have on pay TV subscriptions.
To further strengthen ESPN’s position, Iger is exploring the possibility of bringing in minority partners who would take equity stakes in the network. Early discussions have taken place with the National Football League, Major League Baseball, the National Basketball Association, and potentially even the National Hockey League. By partnering with professional sports leagues, ESPN could leverage its expertise to create a unified subscription service for all sports, aligning with the growing trend of streaming platforms.
However, such a partnership could create conflicts of interest with existing media partners and impact sports rights valuations. The involvement of equity-stakeholding leagues may limit bidding wars typically seen among media and technology companies like Comcast’s NBCUniversal, Fox, Paramount Global, Warner Bros. Discovery, Apple, Alphabet, and Amazon.
If finding suitable minority partners proves challenging, ESPN has not ruled out the possibility of spinning off the network entirely. While Iger has been resistant to this idea in the past, Mayer has shown a more open-minded approach. Ultimately, the goal for Mayer, Staggs, and Pitaro is to find a solution that allows Disney to retain a majority stake in ESPN, given its current ownership of 80%, with Hearst holding the remaining 20%.
Iger is actively seeking partners who can bring valuable content or distribution advantages to ESPN. However, it remains uncertain if any strategic companies would be interested in owning a minority stake in ESPN, considering Disney’s majority control over the network.
Through these innovative strategies and collaborations, Iger aims to navigate the evolving media landscape and secure the future success of ESPN.
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