CNBC has reported that in early discussions, ESPN has explored potential strategic partnerships with the NBA, NFL, and MLB that could involve the leagues taking a portion of ownership in the business. Last week, Disney CEO Bob Iger mentioned the possibility of getting a strategic partner for ESPN in an interview with CNBC. If an agreement was reached between ESPN and the leagues, it would be a first-time occurrence, but it would also secure ESPN a guarantee of high-quality programming from the leagues.
Bob Iger and ESPN head Jimmy Pitaro have held early talks about potentially having professional sports leagues, such as the NFL, NBA, and MLB, be minority investors in ESPN. According to people familiar with the matter, discussions have taken place between ESPN and the three leagues involving different partnerships and investment structures. The NBA did confirm these conversations in a statement and said they look forward to continuing the conversation about the future of their partnership with Disney. Representatives from ESPN, NFL, and MLB all declined to comment.
The NFL's conversations with ESPN are in relation to potentially having a company purchase a stake in the NFL Network, RedZone, and NFL.com. Along with this, there have been conversations between the NBA and Disney about the renewal of media rights for Disney. Bob Iger later talked to CNBC's David Faber about looking for a strategic partner for ESPN to help with content and/or distribution. He clarified that selling a stake of the business was a possibility.
Though it may seem like partnering with ESPN would not result in a great outcome for the leagues, it could actually open up new subscription streaming services. Fans would then be able to purchase specific packages of games, and access other innovative ways to stream content. The partnership would benefit Disney as they attempt to shift away from their traditional cable subscriber model.
However, this potential partnership has been met with some scrutiny, as ESPN does employ hundreds of journalists to cover professional sports leagues. If the leagues were to take a minority stake in ESPN, it could indubitably cause some issues with the perception of objectivity. It could also potentially cause conflicts of interest because the leagues would be incentivized to promote ESPN instead of striking deals with other companies.
Disney is cognizant that ESPN will not be able to generate income with the traditional TV model like before. To level the playing field with the tech giants, Apple, Google and Amazon, Disney is considering offering a stake in ESPN to leagues, which in turn will ensure ESPN a steady access to content. Until last quarter, revenue growth was maintained due to increased payments from pay-TV providers, primarily driven by ESPN. However, this trend reversed as cancellations surpassed fee hike. As such, Bob Iger, CEO of Disney, iterated his plans to transform ESPN into a streaming portal for sports and also floated the idea of a partnership if it adds value. He views this as a step towards making ESPN a direct-to-consumer offering.
コメント