There’s been an incredible amount of back-and-forth around the idea of Disney selling an equity stake in ESPN over the last few months. That started when Disney CEO Bob Iger first brought up the idea of “strategic partners” for ESPN (and possibly selling off ABC and other networks) in a July CNBC interview.
At that time, Iger wasn’t overly specific about what that might look like, offering a wide variety of ways a strategic partner might help. He said “Whether it’s content value, whether it’s distribution value, whether it’s capital, whether it just helps the risk of the business some extent, but that wouldn’t be the primary driver…but if they come to the table with value that enables ESPN to make a transition to its direct-to-consumer offering, then we’re gonna be very open minded about that.”
Since then, companies in all of those categories have come up as possible ESPN strategic partners. That’s included reports on private equity firms (capital and risk) through tech firms and mobile companies (distribution, maybe some content) through sports leagues (content, possibly local as well as national). Many of those reports have indicated that only that category’s now being considered, but they’ve been followed by other reports discussing different categories. So that’s some valuable context to have around a new New York Times report from Kevin Draper and Ben Mullin citing Disney/ESPN sources that say they’re now only considering an equity sale to a league or leagues, and have had specific discussions with the NBA:
https://twitter.com/kevinmdraper/status/1718988130689163500
There are several complicating factors with the NBA in particular. That Mullin/Draper report says “The most likely scenario, according to the people familiar with the negotiations, is that Disney and Warner Bros. Discovery will sign new agreements with the N.B.A. to televise fewer games” [pause for laughter at the NYT abbreviation of “N.B.A.”], which fits with other recent reports. But WBD already has those NBA social media operations through their NBA Digital/NBATV deal with the league, and that deal includes a lot of documentary rights, game distribution (out-of-market on League Pass), marketing partnerships and more. So if WBD stays involved, it seems at least somewhat unlikely those aspects would go to ESPN.
There may be additional documentary rights, game distribution, or marketing partnerships the NBA could do with ESPN as an equity partner without transferring over what’s already at WBD, though. And the general discussions here could be notable around other leagues. The NFL and MLB have already been mentioned here, and the NFL has been looking to sell off stakes in its media operation, and MLB is in an interesting place with taking over some of its teams’ local broadcast rights.
Beyond the NBA specifics, though, the most interesting thing here is that idea that Disney and ESPN executives are now only targeting leagues as equity partners. That doesn’t mean that will happen, of course: some equity searches end in a deal not being struck (and can still be valuable as a way to evaluate market interest in the company, as well as potential partners for deals not involving equity), and the report here comes with a strong “if they are to give up equity” caveat. And there are particular image, content, journalism and possibly even antitrust concerns around ESPN specifically selling stakes to leagues.
As noted above, many of the various reports on Disney/ESPN only considering a particular category have been followed by reports that they’re only considering a different category. So none of this is necessarily definitive. But Draper and Mullin have gotten plenty of sports business scoops in the past, and it’s certainly notable that ESPN/Disney sources are telling them leagues are now the main equity partners they’re considering. We’ll see where this goes from here.
