NFL In 'Advanced Talks' To Buy Equity Stake in ESPN

ESPN and the NFL are close to a blockbuster partnership that would give the league a stake in the network and the network control of the league’s media operations.

The New York Post reported late Friday that the NFL and ESPN are in advanced talks on a strategic partnership under which the NFL would acquire a stake in ESPN and ESPN would assume control of NFL Media, including NFL Network and RedZone. A deal would satisfy needs for both sides; Disney has been seeking investors for ESPN and the NFL a partner to take control of its media operation.

Per the Post report, a deal could still be months away, but talks have reached the point that both the owners and players association are being kept informed.

In return for the league’s equity stake, according to the Post, ESPN would take control of NFL Media, the entity that owns the league’s production unit, NFL Films, and the league’s cable channels — the NFL Network and RedZone, NFL.com and NFL+, the recently launched streaming service that enables subscribers to watch games and other related content on mobile devices.

Walt Disney Co. Chief Executive Bob Iger previously mentioned the possibility of finding an equity partner for ESPN, which while still profitable faces a challenging future as pay TV cord-cutting threatens the subscription revenue that has made it one of the most successful media businesses in history.

The LA Times reports ESPN has long been the most expensive part of the pay TV bundle, currently getting close to $9 per subscriber. It is now in 73 million homes, down from 98.5 million in 2013.

While the pay TV universe is shrinking, media rights fees are escalating as deep-pocketed tech companies such as Amazon and Apple are vying for properties to add to their streaming services.

One question that will need to be addressed is the reaction of the NFL’s other media partners, NBC, CBS, Amazon, YouTube and Fox, which along with Disney are committed to pay the league more than $100 billion over the next 10 years

Disney’s package includes “Monday Night Football,” which aired on both ABC and ESPN this past season, and two Super Bowls.

ESPN, which could make itself available to noncable homes with a direct-to-consumer streaming service as soon as next year, has tried to find ways to make itself more appealing to younger consumers who are forgoing pay TV subscriptions.

Sports Media Watch reports the potential deal would mark a new frontier in the sports-media symbiosis. For as much as ESPN pays for NFL rights, the league and network are still separate entities. That will no longer be the case once this deal is done.

The NFL partnership would be just the latest transformation for ESPN, which last year announced a deal with Penn Entertainment to launch an ESPN-branded sportsbook and intends next year to launch a direct-to-subscriber feed of its linear channels. (The Post report hinted that ESPN could well move up the date for its direct-to-subscriber move to as soon as this year.) As the company has shed subscribers, it has become increasingly willing to make compromises that would have once been unlikely, if not unthinkable.