Earlier this month, Disney CEO Bob Iger said their non-ESPN linear networks “may not be core” to their business, but that they do want to stay in sports and have been in conversations with “strategic partners” who might take a stake in ESPN. In the wake of that, a wide variety of potential partners have been floated, from private equity and tech firms to sports leagues.
One idea that got a whole lot of discussion was a deal with NBCUniversal parent Comcast. There was some logic to that: Disney is expected to pay Comcast shortly to buy out its minority stake in Hulu, so even a Hulu stake for ESPN stake trade of some variety was floated. Comcast also has the advantage of being the U.S.’s largest multichannel video programming distributor, which would help with Disney’s plans to maintain their linear business while working on the transition to full over-the-top streaming of their linear feed. (And Iger did specifically mention “distribution value” as one thing they might target with strategic partners.)
Despite all that, though, Comcast doesn’t seem high on the idea. Comcast president Mike Cavanagh (who is also overseeing NBCUniversal these days following the April firing of NBCU CEO Jeff Shell around sexual harassment allegations) said on an investors’ call Thursday that it’s “very improbable” they would swap their Hulu stake for an ESPN stake and saying to “put aside” that probability.
Speaking on the company’s second-quarter earnings call, Cavanagh said the scenario would involve too many complications to be feasible.
“I’ve been asked about and read about speculation that in some way we might be interested in swapping businesses as part of what’s going on in the sports space, and I would just say that that’s very improbable,” the exec said.
…“As you’d imagine, there are tremendous issues around tax, minority shareholders and structuring generally,” he said. “So, I would put aside the probability that there’s anything inorganic that’s likely to happen around ESPN in particular.”
Now, of course, executive comments are not the last and final word on if a deal will or won’t be made. Executives often don’t say everything they know, and situations can change. (And, in any sort of deal like this, the terms would matter a lot; the valuations of both ESPN and Hulu are a bit up for debate at the moment, and Comcast might have more interest in a deal if it was at valuations favorable to their side.) And “very improbable” is not “impossible,” as many Disney-owned movies illustrate.
But it is interesting to hear Cavanagh publicly throw such cold water on an ESPN-Hulu swap. And while his comments here are mostly about shooting down the swap idea, they don’t seem terribly favorable to the idea of Comcast investing in ESPN in general.
And even if Comcast was high on the idea, there would likely be significant regulatory and antitrust hurdles to overcome. Those might be clearable if both sides were really motivated to get this done, but Comcast certainly doesn’t seem too intrigued by the prospect. So Disney’s “strategic partners” for ESPN, if they do wind up finding them (many equity searches end without a deal being made), may have to come from elsewhere.
[Deadline; Cavanagh image from corporate.comcast.com]
