Disney Open to Finding An ESPN Partner

Disney is open to potentially selling 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 told CNBC Thursday.

The linear TV business has degraded over the past year more than Iger expected, the Disney CEO told CNBC’s David Faber Thursday in an interview at Sun Valley, Idaho. Disney announced yesterday Iger has extended his contract to 2026 as CEO. He returned to run Disney last year after stepping down as CEO in 2020.

Disney has held early conversations with potential partners that could improve an ESPN streaming service by extending its distribution and adding content, Iger said. He declined to name specific partners. Disney currently owns 80% of ESPN. Hearst Communications owns the other 20%.

Disney has held off from putting its prime ESPN content on its ESPN+ streaming service as it continues to make billions of dollars in revenue each year through traditional cable TV. Still, millions of Americans cancel their cable subscriptions each year, and that number has accelerated in recent years.

“The challenges are greater than I had anticipated,” Iger said. “The disruption of the traditional TV business is most notable. If anything, the disruption of that business has happened to a greater extent than even I was aware.”

A broader streaming offering Iger said he had become more certain in his thinking about when ESPN will launch its complete direct-to-consumer offering. He declined to say when that will happen.

Iger’s comments about finding a strategic partner suggest he believes ESPN may function better in a streaming environment if paired with other companies’ sports content. CNBC reported earlier this year that ESPN wants to be a hub for all live sports programming if it can agree to partnerships with other media companies.

ESPN became the crown jewel of Disney’s asset portfolio in the early 2000s by charging increasingly exorbitant amounts to pay-TV providers for the right to carry the network. The popularity of its sports programming, including “Monday Night Football,” allowed it to this.

But in the traditional cable TV business model, ESPN made money per cable subscriber — whether a person watched or not. In a streaming world, only intentional sports fans would buy a service. That increases the importance of putting as much quality programming on the platform as possible — especially if it’s priced more higher than entertainment streaming services.