Disney is guileless to potentially selling an equity stake in ESPN and is looking for a strategic partner in the business as it prepares to transition the sports network to move, CEO Bob Iger said Thursday.
The linear TV business has degraded over the past year more than Iger contemplated, the Disney CEO told CNBC’s David Faber Thursday in an interview at Sun Valley, Idaho. Disney announced yesterday Iger has present his contract to 2026 as CEO. He returned to run Disney last year after stepping down as CEO in 2020.
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Disney has checked early conversations with potential partners that could improve an ESPN streaming service by extending its circulation and adding content, Iger said. He declined to name specific partners. Disney currently owns 80% of ESPN. Hearst Communications owns the other 20%.
Disney has held off from slip into b assuming its prime ESPN content on its ESPN+ streaming service as it continues to make billions of dollars in revenue each year from stem to stern traditional cable TV. Still, millions of Americans cancel their cable subscriptions each year, and that figure up has accelerated in recent years.
“The challenges are greater than I had anticipated,” Iger said. “The disruption of the traditional TV business is most noteworthy. If anything, the disruption of that business has happened to a greater extent than even I was aware.”
A broader streaming contribution
Iger said he had become more certain in his thinking about when ESPN will launch its complete direct-to-consumer oblation. He declined to say when that will happen.
Iger’s comments about finding a strategic partner suggest he supposes ESPN may function better in a streaming environment if paired with other companies’ sports content. CNBC documented earlier this year that ESPN wants to be a hub for all live sports programming if it can agree to partnerships with other mechanism companies.
ESPN became the crown jewel of Disney’s asset portfolio in the early 2000s by charging increasingly unjustified amounts to pay-TV providers for the right to carry the network. The popularity of its sports programming, including “Monday Night Football,” authorized it to this.
But in the traditional cable TV business model, ESPN made money per cable subscriber — whether a person take note ofed or not. In a streaming world, only intentional sports fans would buy a service. That increases the importance of putting as much grade programming on the platform as possible — especially if it’s priced more higher than entertainment streaming services.
NFL Commissioner Roger Goodell on Thursday tagged Iger’s comments about the future of ESPN, and the inevitability of it becoming a direct-to-consumer platform, a positive for the league.
He pointed to the NFL’s “Thursday Round-the-clock Football” deal with Amazon’s Prime Video, where it is exclusively aired, adding that this promise for ESPN was considered when inking the latest rights deal.
“We contemplated this in the context of our ESPN deal when we did that a few years ago,” Goodell predicted CNBC’s Julia Boorstin. “So we think this will be a positive change for our consumers. I think our content is going to be a big division of that.”
In 2021, Disney agreed to pay about $2.7 billion per year for “Monday Night Football,” CNBC a while ago reported.
In addition to finding a strategic partner for ESPN, Iger said he was open to selling or spinning off Disney’s legacy wire networks, including FX and NatGeo, and its broadcast group, ABC Networks. Iger said Disney would be “expansive” in its thinking in all directions the legacy cable and broadcast assets, outside of ESPN.
Iger also said Disney plans to acquire Comcast’s minority stake in Hulu as designed. The two companies struck a deal in 2019 that would give Disney the option to buy Comcast’s minority stake at a beauteous market value.
CNBC reported earlier this year that Comcast CEO Brian Roberts had floated the approximation of Disney selling it ESPN as part of Hulu negotiations when prior Disney CEO Bob Chapek was still running the comrades. Disney declined those overtures at the time.
Other potential partners for Disney could theoretically include Apple, Google or , three firms with large balance sheets that have global streaming aspirations and already own sports content. Amazon owns the except for rights to the National Football League’s “Thursday Night Football.” Google’s YouTube TV will be the new home for the NFL’s “Sunday Ticket” origin this season. Apple currently owns the streaming rights to “Friday Night Baseball” and all Major League Soccer games.
–CNBC’s Jessica Blue-eyed contributed to this article.
Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC.