Despite a newly unveiled business structure at Disney, which sees ESPN in its own division at the company, CEO Bob Iger said he has no plans to spin off the sports brand.
On the company’s first-quarter earnings call, Iger said that the new structure was not designed with a spin off in mind, though he added that he anticipated that questions about a sale would come up.
“ESPN is a differentiator for this company, is the best sports brand and television, is one of the best sports brand in sports. It continues to create real value for us. It is going through some obviously challenging times because of what’s happened in linear programming. But the brand of ESPN is very healthy, and the programming of ESPN is very healthy,” Iger said. “We just have to figure out how to monetize it in a disrupting and continuing disrupting world. That’s it.”
Related Stories
“But we’re not engaged in any conversations right now or considering a spin off of ESPN that had been done by the way in my absence. And I’m told the company concluded after exploring it very carefully, that it wasn’t something the company wanted to do,” he added.
Instead, Iger said that the company intends to leverage ESPN’s power in the linear TV bundle to drive cashflow, and eventually to shift it to streaming.
“If you’re asking me is the shift inevitable? The answer is yes,” Iger said. “But I’m not going to give you any sense of when that could be. Because we have to do it at a time that really makes sense for the bottom line and we’re just not there yet. And that’s not just about how many subscribers we could get, it’s also about what is the pricing power of ESPN, which obviously ties to the menu of sports that they’ve licensed.”
Questions about ESPN and its place at Disney have lingered for years. In fact, Iger, in his 2019 autobiography, cited an earnings call in which he acknowledged ESPN’s linear challenges, and used it to pivot the company toward streaming.
But for now, at least, Iger suggests that ESPN, which is led by Jimmy Pitaro, will continue to have a place at the company, though he said that he and Pitaro have had conversations about what rights the company will pursue.
Disney still wants to be in business with the NBA, which is set to open negotiations for its next deals this year. But when it comes to other sports rights, “we’re simply going to have to get more selective,” Iger said.
Alex Weprin contributed to this report.
