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Disney CEO: ESPN isn’t ready to break from cable

The sports network will eventually move away from the cable bundle in favor of streaming, but not anytime soon.

The sports network will eventually move away from the cable bundle in favor of streaming, but not anytime soon.

A still frame from an ESPN “SportsCenter” broadcast on January 2, 2023. (Still frame via ESPN/ABC broadcast, Graphic by The Desk)

The Walt Disney Company will split its business into three focus groups, including one dedicated to its sports brand ESPN, the company’s top executive affirmed this week.

On a conference call with investors and reporters, Disney CEO Bob Iger shot down speculative rumors that suggested the company was open to spinning off or selling ESPN, a brand that it co-owns with Hearst Television (Disney owns 80 percent of ESPN).

“It’s one of the best brands in sports,” Iger said. “It continues to create real value for us.”

Of Disney’s three core streaming products, ESPN Plus saw the biggest increase in quarterly average revenue per user (ARPU), according to the company’s latest financial earnings report released on Wednesday. ESPN Plus’ ARPU was reported at $5.53 for the three-month period that ended December 31, 2022, up 14 percent from $4.84 reported in the previous quarter. ESPN Plus had 24.9 million subscribers, up 2 percent from the 24.3 million reported the previous quarter.

On Wednesday, Iger reaffirmed the future of Disney’s media brands, including its television and film production and distribution, was firmly rooted in streaming. When asked by a reporter if that meant ESPN’s linear multiplex of channels — which includes ESPN U, ESPNews, the Longhorn Network and others — would be offered as a streaming product beyond cable and satellite television, Iger said it was going to happen eventually, but declined to provide a timetable or any insight into when that transition might take place.

“ESPN Plus has grown nicely for us, and it shows us that the ESPN brands can be enjoyed and grow as a streaming brand,” Iger said on Wednesday. “We’re going to look at that as a pivot away from the linear business, but we’re not going to do that until it really makes sense from an economic perspective.”

That means sports fans who want to watch nationally-televised, pro-sports games carried on the ESPN channels will have to continue subscribing to cable, satellite or a streaming cable alternative like Dish Network’s Sling TV, Vidgo or Fubo TV if they want access to those matches.

That said, Disney has already started to experiment with simulcasting some live sports programming on ESPN Plus, including the National Football League’s “Monday Night Football.” Disney has also negotiated some domestic sports rights exclusively for ESPN Plus, including regular season, out-of-market National Hockey League games, Ultimate Fighting Championship matches, golf, tennis and cricket.

Disney has spent a considerable amount of money building up ESPN Plus and its two other streaming products, Disney Plus and Hulu as part of its strategy to attract and retain subscribers. That approach has meant substantial financial losses for Disney’s direct-to-consumer products, something Iger said needed to drastically change if the company wanted its streaming products to be profitable in the near future.

As part of that shift, Iger said ESPN will be more judicious about securing sports rights in the future.

“I’ve had long conversations about this…and we’ve got some decisions we have to make, not on anything particularly large, but on a few things,” Iger said. “We’re simply going to have to get more selective.”