TOPLINE

Disney’s sports broadcasting network ESPN could be valued at about $24 billion, according to a Bank of America analyst note, which said potential investment suitors like Amazon, Apple and Verizon could help manage Disney’s push to transition from linear TV toward streaming.

KEY FACTS

Disney intends to keep ESPN and has reportedly been on the hunt to find partners for a full streaming service of the sports network, according to multiple sources, as marquee products like Monday Night Football are not aired on the existing ESPN+ streaming platform.

Disney—which owns 80% of ESPN, while Hearst holds the remaining 20%—could sell stake in the company to new investors assuming it intends to maintain majority ownership, according to the note.

The note added a partnership deal between Disney and another company could help Disney bridge the gap to a streaming version of ESPN, bring a capital infusion that could bolster ESPN’s offerings and give Disney a chance to spin off ESPN in the future.

On top of potential tech company suitors, Bank of America added leagues like the National Football League and National Basketball Association could be potential investment partners, in addition to distribution firms like Verizon.

The note said ESPN needs to transition to a direct-to-consumer model to compensate for an environment in which linear TV subscribers are declining.

BIG NUMBER

$2.9 billion. That’s how much profit ESPN generated for Disney’s fiscal year 2022, almost $1 billion more than the profit raked in by Disney’s entertainment business in that same window, Axios reported.

KEY BACKGROUND

A potential ESPN streaming service would come as tech giants like Google and Amazon push into sports broadcasting. Amazon spends about $1 billion a year to maintain an 11-year media rights deal with the NFL to air Thursday Night Football on its streaming service—while YouTube, which is owned by Google, agreed to a seven-year contract with the NFL last year worth more than $2 billion per season for the rights to NFL Sunday Ticket, which gives subscribers access to all out-of-market broadcasts. As sports rights deals have become more prevalent, so too have cord-cutting tendencies among consumers. Television providers experienced record subscriber losses in the first quarter of this year, losing 2.3 million customers, according to Variety, citing MoffettNathanson research. The total pay-TV penetration of occupied households in the U.S. also dropped to 58.5% during the period, a figure not seen since 1992, Variety added.

FURTHER READING

NFL Adding Peacock-Only Playoff Game In First-Of-Its-Kind Streaming Deal (Forbes)

Amazon in Talks With Disney About ESPN Streaming Partnership (The Information)