Disney CEO Bob Iger open to selling ESPN stake
The GIST: ESPN continues to make headlines. Just weeks after the sports network’s mass layoffs, Disney is considering selling some of its stake in the company. If the “worldwide leader in sports” is struggling to make financial sense of their broadcasts, what does that mean for the future of televised sports?
The details: Disney CEO Bob Iger announced late last week that the company is “open to potentially selling an equity stake in ESPN,” He further stated that Disney is seeking a partner to help transition the sports behemoth deeper into the streaming-world — a task the company has struggled with, thus far.
- ESPN’s been hemorrhaging cable subscribers for years, losing 914K U.S. customers in Q1 of 2023 alone. As for boosts from ESPN+, the company reported $1.47B in losses from its direct-to-consumer streaming division in Q4 2022, and CEO Bob Chapek previously said those losses were only partially offset by cord-cutters.
- Iger, who doesn’t see ESPN or its network monster ABC as “core” to Disney, admits the traditional TV model may be more broken than he once thought, hinting at the creation of a more direct-to-consumer streaming service akin to Disney’s other subsidiaries, like NatGeo.
The background: ESPN’s recent layoffs comprised just a sliver of Disney’s total number of pink slips. In an attempt to cut $5.5B in costs, the Mouse company slashed 7K jobs so far this year. With these moves, it continues to avoid reductions in revenue earned, generating about $22B in revenue in Q2 of 2023 — up 13% YoY.
Zooming out: Despite revenue trending up for ESPN, broadcast expenses remain high. Given that, will (some) distance from Disney help or hurt ESPN? An outside company with streaming experience could help steer the sports co. in the right direction, and set them up to successfully execute a modern TV strategy.
- As users’ consumption habits — especially Gen Z — continually change, ESPN’s under pressure to step up, change, and keep up…or be left behind.