disney CEO Bob Iger said on Thursday that the company is willing to sell its stake in ESPN and is looking for a strategic partner for the business as it prepares to transform the sports network into streaming media.
Disney’s chief executive told CNBC’s David Faber in an interview Thursday in Sun Valley, Idaho, that the linear TV business has declined more than Iger expected over the past year. Disney announced yesterday that Iger has extended his contract as CEO through 2026. He stepped down as CEO in 2020 and returned to run Disney last year.
Iger said Disney has had early conversations with potential partners who could improve the ESPN streaming service by expanding distribution and adding content. He declined to name specific partners. Disney currently owns 80% of ESPN. Hearst Communications owns the other 20%.
Disney has been holding off on putting its main ESPN content on the ESPN+ streaming service because it still makes billions of dollars a year through traditional cable. Still, millions of Americans cancel their cable subscriptions every year, and that number has accelerated in recent years.
“The challenge was bigger than I expected,” Iger said. “The disruption in the traditional TV business has been the most dramatic. If anything, it’s more disrupted than I realized.”
Wider range of streaming services
Iger said he is more certain about when ESPN will launch a full direct-to-consumer service. He declined to say when that would happen.
Iger’s comments about finding a strategic partner indicate his belief that ESPN might function better in the streaming environment if combined with other companies’ sports content. CNBC reported earlier this year that ESPN If it can agree to partnerships with other media companies, it wants to be the center of all live sports programming.
In the early 2000s, ESPN became the crown jewel of Disney’s portfolio by charging pay-TV providers increasingly high fees for the rights to operate the network. The popularity of its sports programming, including Monday Night Football, has allowed it to do just that.
But in the traditional cable business model, ESPN makes money for each cable subscriber — whether anyone watches or not. In the streaming world, only the willful sports fan buys a service. That increases the importance of putting as many high-quality shows as possible on the platform — especially if it’s pricier than an entertainment streaming service.
On Thursday, NFL Commissioner Roger Goodell said Iger’s comments about ESPN’s future and its inevitability as a direct-to-consumer platform were positive for the league.
He pointed to the NFL’s deal with Amazon Prime Video for “Thursday Night Football,” which airs exclusively on Amazon Prime Video, adding that ESPN had that possibility in mind when it signed its latest rights deal.
“We thought about that a few years ago when we did the deal with ESPN,” Goodale told CNBC’s Julia Boorstin. Positive change. 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 spinning off Disney’s legacy cable networks, including FX and NatGeo, as well as its broadcast group, ABC Networks. Iger said Disney will be thinking “broadly” beyond ESPN’s traditional cable and broadcast properties.
Iger also said Disney plans to buy Comcast’s minority stake in Hulu as planned. The two companies reached an agreement in 2019 under which Disney had the option to buy a minority stake in Comcast for fair market value.
CNBC reported earlier this year that Comcast When former Disney CEO Bob Chapek was still running the company, CEO Brian Roberts floated the idea of Disney selling to ESPN as part of Hulu’s negotiations. part. Disney rejected those offers at the time.
In theory, other potential Disney partners could include apple, Google or amazon, these three companies have huge balance sheets, have global streaming ambitions, and already own sports content. Amazon owns the exclusive rights to the NFL’s “Thursday Night Football.” Starting this season, Google’s YouTube TV will be the new home of the NFL’s “Sunday Ticket.” Apple currently owns the streaming rights to “Friday Night Baseball” and all Major League Soccer games.
–CNBC’s Jessica Golden contributed to this article.
Disclosure: Comcast is the parent company of NBCUniversal (including CNBC).
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