disney is ready to potentially sell an equity stake in ESPN and is looking for a strategic partner in the business as it prepares to transition the sports network to streaming, CEO Bob Iger said Thursday.
Linear TV business has declined The Disney CEO told CNBC’s David Faber in an interview in Sun Valley, Idaho, on Thursday that Iger has had higher sales than expected in the past year. Disney announced Iger yesterday extended my contract as CEO till 2026. He returned to run Disney last year after stepping down as CEO in 2020.
Iger said Disney is in preliminary talks with potential partners that could improve the ESPN streaming service by expanding its distribution and adding content. He declined to name the specific partners. Disney currently owns 80% of ESPN. Hearst Communications holds the other 20%.
Disney has held off on putting its flagship ESPN content on its ESPN+ streaming service as it continues to generate billions of dollars in revenue each year through traditional cable TV. Still, millions of Americans cancel their cable subscriptions every year, and that number has accelerated in recent years.
“The challenges are bigger than I expected,” Iger said. “Most notable is the disruption of the traditional TV business. If anything, the disruption of that business has been to a greater extent than I was aware of.”
Iger said he has become more certain about when ESPN will launch its full direct-to-consumer offering. He declined to say when that would happen.
Iger’s comments about finding a strategic partner suggest he believes ESPN can do better in the streaming environment if it is combined with sports content from other companies. CNBC reported earlier this year that ESPN Wants to be the hub of all live sports programming If it can agree to a partnership with other media companies.
ESPN became the crown jewel of Disney’s asset portfolio in the early 2000s by charging pay-TV providers exorbitant fees for the rights to carry the network. The popularity of its sports programming, including “Monday Night Football”, allowed it to do so.
But in the traditional cable TV business model, ESPN made money per cable subscriber — whether someone watched or not. In the streaming world, only willful sports fans would buy a service. This heightens the importance of putting as much quality programming as possible on the platform – especially if it costs more than entertainment streaming services.
NFL commissioner Roger Goodell on Thursday called Iger’s comments about the future of ESPN and the imperative for it to become a direct-to-consumer platform a positive for the league.
He pointed to the NFL’s “Thursday Night Football” deal with Amazon’s Prime Video, where it airs exclusively, and said this possibility was considered for ESPN when signing the latest rights deal. Was.
“We considered this in the context of our ESPN deal when we did it a couple of years ago,” Goodell told CNBC’s Julia Boorstin. “So we think this is going to be a positive change for our consumers. I think our content is going to be a big part of that.”
In addition to finding a strategic partner for ESPN, Iger said he is prepared to sell or spin 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 legacy cable and broadcast properties, outside of ESPN.
Iger also said that Disney plans to acquire Comcast’s minority stake in Hulu, according to the plan. The two companies struck a deal in 2019 that would give Disney an option to buy a minority stake of Comcast at fair market value.
cnbc reported earlier this year He Comcast CEO Brian Roberts pitched the idea of selling ESPN to Disney as part of the Hulu negotiations, when former Disney CEO Bob Chapek was still running the company. Disney declined those offers at the time.
Disney’s other potential partners could theoretically be involved. Apple, Google Or AmazonThree companies with large balance sheets that have global streaming aspirations and that already have sports content. Amazon has the exclusive rights to “Thursday Night Football” from the National Football League. Google’s YouTube TV will be the new home for the NFL’s “Sunday Ticket” starting this season. Apple currently has 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, which also includes CNBC.