disney is open to the potential sale of an equity stake in ESPN and is seeking a strategic partner in the company as it prepares for the sports network’s transition to streaming, CEO Bob Iger said Thursday.
The linear TV business has declined more in the past year than Iger expected, Disney’s CEO told CNBC’s David Faber in an interview in Sun Valley, Idaho, on Thursday. Disney announced yesterday that Iger has extended his contract as CEO until 2026. He returned to lead Disney last year after stepping down as CEO in 2020.
Disney has had early talks with potential partners who could enhance an ESPN streaming service by expanding distribution 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 refrained from putting its core ESPN content on its ESPN+ streaming service as it continues to earn billions of dollars in revenue each year from traditional cable television. Yet millions of Americans cancel their cable subscriptions every year, and that number has accelerated in recent years.
“The challenges are bigger than I expected,” said Iger. “The disruption of the traditional TV business is most striking. The disruption of that business has certainly happened to a greater extent than even I knew.”
A wider streaming offer
Iger said he’s become more confident in his thinking about when ESPN will launch its full direct-to-consumer offering. He declined to say when that will happen.
Iger’s comments about finding a strategic partner suggest that he believes ESPN can function better in a streaming environment when combined with other companies’ sports content. CNBC reported earlier this year that ESPN aims to be a hub for all live sports programming if it can agree to partnerships with other media companies.
ESPN became the crown jewel of Disney’s asset portfolio in the early 2000s by charging increasingly exorbitant amounts to pay TV providers for the right to carry the network. The popularity of its sports programs, including “Monday Night Football,” allowed this.
But in the traditional cable TV business model, ESPN made money per cable subscriber — whether someone was watching or not. In a streaming world, only intentional sports fans would buy a service. That adds to the importance of putting as much quality programming on the platform as possible, especially if it’s more expensive than entertainment streaming services.
![NFL Commissioner Roger Goodell on sports streaming, expansion and the future of ESPN](https://image.cnbcfm.com/api/v1/image/107271319-16892725271689272522-30287321132-1080pnbcnews.jpg?v=1689273526&w=750&h=422&vtcrop=y)
NFL Commissioner Roger Goodell on Thursday called Iger’s comments about ESPN’s future, and the inevitability of it becoming a direct-to-consumer platform, positive for the league.
He pointed to the NFL’s “Thursday Night Football” deal with Amazon’s Prime Video, where it airs exclusively, adding that this opportunity was being considered for ESPN when signing the latest rights deal.
“We considered this in the context of our ESPN deal when we did a few years ago,” Goodell told CNBC’s Julia Boorstin. “So we think this will be a positive change for our consumers. I think our content will be a big part of that.”
In 2021, Disney agreed to pay about $2.7 billion a year for “Monday Night Football,” CNBC previously reported.
In addition to finding a strategic partner for ESPN, Iger said he was open to selling or spun off Disney’s legacy cable networks, including FX and NatGeo, and its broadcast group, ABC Networks. Iger said Disney would be “expansive” in its thinking about the legacy cable and broadcast resources, outside of ESPN.
Iger also said that Disney plans to acquire Comcast’s minority stake in Hulu as planned. The two companies struck a deal in 2019 that would give Disney the option to buy Comcast’s minority stake at a fair market value.
CNBC reported this earlier this year Comcast CEO Brian Roberts had floated the idea of Disney selling ESPN as part of Hulu negotiations when former Disney CEO Bob Chapek was still running the company. Disney rejected those overtures at the time.
Other potential partners for Disney could be theoretical Apple, Google or Amazon, three companies with large balance sheets that have global streaming aspirations and already have their own sports content. Amazon owns the exclusive 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” starting this season. Apple currently owns the streaming rights to “Friday Night Baseball” and all Major League Soccer games.
—Jessica Golden of CNBC contributed to this article.
Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC.