Disney Has No Plans to Spin-Off ESPN, But Considered It

ESPN, a key pillar of The Walt Disney Company, has become a sticking point for some investors, and the house of mouse apparently considered spinning it out into its own company. While investors and media companies continue to look toward the ever evolving world of streaming as the future of entertainment and profits, ESPN continues to be an expensive piece of the portfolio that doesn’t offer returns as they’d like. Speaking during Disney’s quarterly earnings call today, CEO Bob Iger confirmed that currently there are no plans to spin-off ESPN into its own company; but that in the years when he wasn’t CEO, and Bob Chapek was at the top, it was talked about.

“ESPN is a differentiator for this company, is the best sports brand and television, is one of the best sports brands in sports. It continues to create real value for us,” Iger said. “It is going through some obviously challenging times because of what’s happened in linear programming. But the brand of ESPN is very healthy, and the programming of ESPN is very healthy. We just have to figure out how to monetize it in a disrupting and continuing disrupting world. That’s it. We’re not engaged in any conversations right now, or considering, a spin-off of ESPN.”

He added, “That had been done, by the way, in my absence and I’m told the company concluded after exploring it very carefully that it wasn’t something the company wanted to do.”

Iger did confirm that it seems “inevitable” that ESPN will eventually make a major shift from linear cable to a streaming package. When asked about this specifically during the Q&A portion of the call, Iger added, “Is the shift inevitable? The answer is yes, but I’m not going to give you any sense of when that could be. Because we have to do it at a time that really makes sense for the bottom line and we’re just not there yet. And that’s not just about how many subscribers we could get, it’s also about what is the pricing power of ESPN, which obviously ties to the menu of sports that they’ve licensed.”  

Why would Disney spin-off ESPN into its own company?

The reasons for making ESPN its own media company that is separate from Disney largely come down to the opinion of investors. Some believe that spinning off ESPN would help ease the debts that The Walt Disney Company maintains as a whole. There’s a large cost associated with ESPN not only for production of live events but in securing the broadcast rights to major sports leagues. Others also believe that the slowed growth of ESPN as a traditional cable network, when many are abandoning cable for streaming subscriptions instead, makes it a drag on Disney’s long-term planning. Another key component that investors like for making ESPN its own entity is its association with sports betting, something that could perhaps be integrated even further if it was its own company.