The Walt Disney Co. on Wednesday morning will report its third-quarter earnings, and along with the standard recap of how things are shaking out at its theme parks, film studios and media platforms, CEO Bob Iger is also expected to make an ex cathedra proclamation about the long-simmering NFL Media swap.
While the league’s owners have yet to convene for a vote on ESPN’s takeover of NFL Network and RedZone, there’s no reason to believe that the proposal won’t skate through with the requisite three-quarters majority. Unanimity’s the most likely outcome, given the outsized influence Patriots owner Bob Kraft enjoys as chairman of the NFL’s media committee; barring an unforeseen and wholly improbable thumbs-down, word has it that Iger will likely spike the disclosure football at around 8:40 a.m. ET, give or take a few ticks of his Rolex GMT-Master II.
If much about the structure and terms of the deal remains sealed within the cranial vaults of the executives who’ve been piecing it together, the broader strokes are legible enough. The NFL will acquire as much as 10% of the ESPN business, whereupon the sports-media titan will take possession of the Shield’s primary media assets. For as long as anyone can remember (i.e., since 1990), Disney has owned 80% of ESPN, with Hearst Corp. controlling the remainder; assuming the league comes through with the full tithe, Disney’s share after the deal closes should settle in at 72%, while the Columbus Circle magazine gang will get bumped down to 18%.
After the requisite signatures are inked, the partners will face upwards of nine months of regulatory sniffing, although the requisite hoops-jumping phase needn’t preclude an immediate consumer-facing arrangement. Which is to say, the early birds who sign on for ESPN’s new DTC service (fka “Flagship”) may very well be able to stream NFL Network and RedZone as soon as the platform launches at the end of the month. (The official blast-off date will be made public during Wednesday’s earnings call.)
Practical matters related to programming and talent have yet to be worked out—displace so much as a single strand of Scott Hanson’s hair and we riot—but one working theory can be put back to sleep: the notion that this deal marks the beginning of the end of Disney’s stewardship of ESPN. As much as activist investors have tried to force the issue in recent years—a month after agitating for the Mouse House to spin off ESPN in August 2022, Third Point’s Daniel Loeb retracted his suggestion, tweeting that the firm had revised its stance after having arrived at “a better understanding of ESPN’s potential as a standalone business”—Disney’s C-suite has consistently dismissed any such chatter.
Earlier this summer, Iger intimated that there was very little chance that Disney would look to shed its linear-TV channels a la Warner Bros. Discovery and Comcast—both of which are in the early stages of spinning off their respective cable network portfolios. “Soon after I returned to Disney [in November 2022], we decided that the best course for us to take was … to hold on to the linear television networks and to integrate them seamlessly with our streaming business,” Iger said during a June 10 appearance on CNBC. “As many others exit that business, I think it gives us a stronger hand to stay in.”
As Iger sees it, there are still enough pay-TV subscribers to justify sticking with the 46-year-old sports network and its even more ancient broadcast sibling. ESPN proper has 63.7 million subscribers, making it one of the most-distributed channels on the cable dial, while ABC’s affiliate network puts it in some 83 million U.S. TV homes. “I think there’s a lot more value in a broadcast network if it’s paired very, very seamlessly with a streaming business,” Iger said.
To Disney’s way of thinking, the traditional linear assets and the burgeoning streaming platforms are about as fundamentally inseparable as Chang and Eng Bunker. Linked at the thorax by a rubbery band of cartilaginous material, the 19th century conjoined twins remained stuck with one another even in death—a peevish cocktail enthusiast, Chang died a few hours before his more affable teetotaler brother, which: yipes—the two even married a pair of sisters, with whom they fathered a grand total of 21 children. (Also yipes.) A postmortem examination revealed that the Bunkers’ livers were connected; given the limitations of contemporary medical technology (hell, it wasn’t until the late 1860s that surgeons began washing their hands before wielding the scalpel), an attempt to separate the twins would’ve resulted in their premature deaths.
Nowadays, you could split Chang and Eng with a deli slicer and send them on their separate ways. In addition to eliminating all the unsettling bedroom/bathroom particulars (yipes³), the latter would have been spared the attendant horror of being hooked up to a corpse for the last hours of his life. For the purposes of this analogy, ESPN and the streaming platforms must remain metaphorically conjoined until the patient on the linear-TV side of the connection is no longer medically viable. For all the squawking from the Street, the legacy ESPN platform is in no danger of conking out any time soon.
There’s no shortage of analysts who continue to encourage Disney to start sawing away—Wells Fargo was certain that a split from ESPN was “reasonably probable” in 2023—but Iger has made it abundantly clear that there will be no spinoffs under his watch. And while he’s set to step down from his post for a second time in December of next year, perhaps no media executive has demonstrated a greater unwillingness to leave the party while the dancefloor is still hopping.
But even if Iger bows out as planned, Disney’s balance sheet presents a compelling argument to continue to allow the DTC platforms to develop alongside the established TV networks. Last year, the ESPN unit generated $17.6 billion in revenue, good for a 3% lift versus the 2023 numbers, while Disney’s networks segment brought in another $10.7 billion. Together, the sports and television properties raked in $28.3 billion, or nearly one-third (31%) of Disney’s total revenue in 2024. Combined operating income at ESPN and the TV portfolio was $5.86 billion, accounting for 38% of the Mouse House’s overall profit, and in this summer’s upfront bazaar, Disney’s sales team booked a cool $4 billion in advance commitments for 2025-26.
Nor have the proportions changed in light of the company’s recent DTC gains. While the streaming unit is on track to generate north of $1 billion in operating income in FY 2025, up from $143 million in the prior year, Disney’s sports and TV holdings are still on pace to kick in at least 30% of the company’s total annual profits. If that constitutes a drag on the core business model, we should all be so lucky to be attached at the hip (sternum, wherever) with such an albatross.
