LeBron James of the Los Angeles Lakers faced off against the LA Clippers at ESPN Wide World Of Sports Complex on July 30, 2020, in Lake Buena Vista, Florida. The game caught the attention of Disney, which is considering a strategic partnership for its subsidiary, ESPN. CEO Bob Iger and ESPN head Jimmy Pitaro have reportedly engaged in initial talks with professional sports leagues, including the NFL, NBA, and MLB, about potential investments and collaborations.
While specific details regarding the discussions remain undisclosed, preliminary talks have taken place between ESPN and the NFL. The NFL has been actively seeking a company to acquire a stake in its media assets, such as the NFL Network, NFL.com, and RedZone. As for the NBA, Disney and the league have explored various partnership structures as they negotiate the renewal of media rights. It’s worth noting that Disney and Warner Bros. Discovery have exclusive negotiation rights with the NBA until next year.
In an interview with CNBC’s David Faber, Iger expressed that Disney is searching for a strategic partner for ESPN amidst its transition to a streaming-focused platform. He hinted that a potential partner could bring added value in terms of distribution or content and didn’t rule out the possibility of selling a stake in the business. Currently, Disney holds an 80% ownership stake in ESPN, while Hearst owns the remaining 20%.
Disney’s interest in collaborating with professional sports leagues aligns with its goal of moving away from the traditional cable subscriber model. By jointly owning a subscription streaming service, the leagues could offer consumers innovative packages and content options. This move would help ESPN navigate the decline of linear subscribers while capitalizing on its strong relationship with the leagues.
However, if the leagues were to become minority stakeholders in ESPN, conflicts of interest could arise due to Disney’s competitors, such as NBCUniversal, Fox, Amazon, Paramount Global, and Apple. These competitors play a significant role in bidding wars for sports rights, which generate billions of dollars for the leagues. Owning a stake in ESPN might deter leagues from striking deals with these competitors, potentially impacting the overall value and objectivity of ESPN’s reporting.
Despite these challenges, ESPN aims to transform itself into a streaming-focused hub for live sports. One of its proposed features would allow users to access games through ESPN.com or the ESPN app, regardless of the streaming platform. While negotiations with professional sports leagues may be complex, Disney is determined to adapt to the streaming-dominated future and leverage its extensive sports rights portfolio.
Bob Iger concludes, “If a partner can bring value that enables ESPN to transition to a direct-to-consumer offering, we’re going to be very open-minded about that.” As the sports media landscape evolves, Disney remains bullish about the potential of sports as a valuable media property.
Source: https://www.cnbc.com/2021/08/06/espn-sees-minority-investments-from-sports-leagues-like-nfl-nba-mlb.html
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