Disney is open to doubtlessly promoting an fairness stake in ESPN and is in search of a strategic accomplice within the enterprise because it prepares to transition the sports activities community to streaming, CEO Bob Iger mentioned Thursday.
The linear TV enterprise has degraded over the previous yr greater than Iger anticipated, the Disney CEO instructed CNBC’s David Faber Thursday in an interview at Solar Valley, Idaho. Disney introduced yesterday Iger has prolonged his contract to 2026 as CEO. He returned to run Disney final yr after stepping down as CEO in 2020.
Disney has held early conversations with potential companions that might enhance an ESPN streaming service by extending its distribution and including content material, Iger mentioned. He declined to call particular companions. Disney at the moment owns 80% of ESPN. Hearst Communications owns the opposite 20%.
Disney has held off from placing its prime ESPN content material on its ESPN+ streaming service because it continues to make billions of {dollars} in income annually by way of conventional cable TV. Nonetheless, tens of millions of Individuals cancel their cable subscriptions annually, and that quantity has accelerated in recent times.
“The challenges are better than I had anticipated,” Iger mentioned. “The disruption of the standard TV enterprise is most notable. If something, the disruption of that enterprise has occurred to a better extent than even I used to be conscious.”
A broader streaming providing
Iger mentioned he had develop into extra sure in his excited about when ESPN will launch its full direct-to-consumer providing. He declined to say when that may occur.
Iger’s feedback about discovering a strategic accomplice recommend he believes ESPN might operate higher in a streaming surroundings if paired with different corporations’ sports activities content material. CNBC reported earlier this yr that ESPN needs to be a hub for all dwell sports activities programming if it might conform to partnerships with different media corporations.
ESPN turned the crown jewel of Disney’s asset portfolio within the early 2000s by charging more and more exorbitant quantities to pay-TV suppliers for the precise to hold the community. The recognition of its sports activities programming, together with “Monday Evening Soccer,” allowed it to this.
However within the conventional cable TV enterprise mannequin, ESPN made cash per cable subscriber — whether or not an individual watched or not. In a streaming world, solely intentional sports activities followers would purchase a service. That will increase the significance of placing as a lot high quality programming on the platform as doable — particularly if it is priced extra larger than leisure streaming companies.
Along with discovering a strategic accomplice for ESPN, Iger mentioned he was open to promoting or spinning off Disney’s legacy cable networks, together with FX and NatGeo, and its broadcast group, ABC Networks. Iger mentioned Disney could be “expansive” in its excited about the legacy cable and broadcast property, exterior of ESPN.
Iger additionally mentioned Disney plans to amass Comcast’s minority stake in Hulu as deliberate. The 2 corporations struck a deal in 2019 that may give Disney the choice to purchase Comcast’s minority stake at a good market worth.
CNBC reported earlier this yr that Comcast CEO Brian Roberts had floated the thought of Disney promoting it ESPN as a part of Hulu negotiations when prior Disney CEO Bob Chapek was nonetheless operating the corporate. Disney declined these overtures on the time.
Different potential companions for Disney might theoretically embrace Apple, Google or Amazon, three corporations with massive stability sheets which have international streaming aspirations and already personal sports activities content material. Amazon owns the unique rights to the Nationwide Soccer League’s “Thursday Evening Soccer.” Google’s YouTube TV would be the new residence for the NFL’s “Sunday Ticket” starting this season. Apple at the moment owns the streaming rights to “Friday Evening Baseball” and all Main League Soccer video games.
Disclosure: Comcast is the guardian firm of NBCUniversal, which incorporates CNBC.