After committing billions over the past few years to snare valuable sports rights, Disney is signaling it might play a more careful game when it comes to ESPN.
Disney on Wednesday unveiled a new corporate structure that pulls ESPN out of its shared structure with the bulk of Disney’s linear TV networks and sets it alone. Disney CEO Bob Iger tamped down speculation that ESPN might be a candidate for a spinoff — something he confirmed was explored while predecessor Bob Chapek ran the corporation — and noted the sports business is still a valuable one for Disney.
“We were fairly certain that when we created this structure, and broke ESPN out on its own, that it would lead to questions like this,” Iger said during a call with investors. “ESPN is a differentiator for this company. It’s the best sports brand in television. It’s one of the best sports brand in sports. It continues to create real value for us. It is going through some obviously challenging times because of what’s happened in linear programming — but the the brand of ESPN is very healthy, and the programming of ESPN is very healthy. We just have to figure out how to monetize it in a continuing, disrupting world. That’s it. But we’re not engaged in any conversations right now or considering a spinoff of ESPN.”
He suggested ESPN chief Jimmy Pitaro and the parent corporation might have to be more selective about sports deals over the near term.
ESPN’s new position at Disney comes as the media world is gearing up for a new rights negotiation with the National Basketball Association. Disney shares rights to NBA games with Warner Bros. Discovery. Given that the National Football League recently secured massive increases in rights deals with all the major media companies and Amazon, there is a sense of near-certainty that the NBA will expect the same. The NBA’s last rights contract was valued at more than $2 billion, and lapses after the 2024-25 season.
Other media chiefs have sounded cautious notes in the recent past. WBD CEO David Zaslav in November told investors that his company “doesn’t have to have the NBA” even though it recently signed all of its top analysts for the sport to new multi-year deals.
Iger also indicated he felt ESPN would inevitably become a streaming-first business. “Regarding ESPN and when we might make the shift, if you’re asking me, is the shift inevitable? The answer is yes, but I’m not going to give you any sense of when that could be, because we have to do it, obviously, at a time that really makes sense for the bottom line. And we’re just not there yet,” he said. “And that’s not just about how many subscribers we could get, it’s also about what is the pricing power of ESPN, which obviously ties to the menu of sports that that they’ve licensed.”