Bob Iger, the chief executive officer of Walt Disney, had a full plate of ESPN for his earnings call this morning.
There the announced sale of 10 percent of the WorldWide Leader to the NFL in return for the NFL Network and other assets, the long-awaited launch in two weeks of the new direct to consumer offering, and throw in there a new WWE streaming deal.
But it was something Iger said at the end of the roughly 40 minute call that caught my attention. Iger had talked a lot about bundling the ESPN app with Disney’s other non-sports apps, Disney+ and Hulu. An analyst then asked him if Disney was considering bundling the soon to be streamed ESPN product with sports apps from other companies.
“We believe there may be opportunities for us to bundle other companies’ sports offerings,” Iger said. “We’ve actually had some discussions with some other companies on doing just that, nothing to report on that. But obviously, we’re not only interested in growing engagement and growing our own subs, but we’re interested in serving consumers better as well.
“The more sports can be offered in one destination for the consumer or ease of use if we can improve the ease of use for consumers, ease of finding things, because as a devoted sportsman, I often have to work to try to find where, what platform sports are on. We can help that. If we can help consumers in that regard, we’re certainly going to try.”
That sounds great, except it also sounds a lot like getting the Venu Sports band back together. It was almost exactly a year ago a federal judge enjoined Disney, Fox Corp and Warner Brothers Discovery from launching their planned app Venu Sports, which would have carried the sports channels from the three companies. The trio later dropped their effort, and Disney agreed to buy Fubo, which had brought the antitrust lawsuit.
That Iger himself says he had trouble finding where a sports program is – a common refrain among fans – underscores the impteus behind Venu remains the same. In the cable bundle, sports fans largely have access to all if not most sports; there are of course carriage disputes and blackouts. But with apps that is not the case.
As much content as the new ESPN app will have, it may not even be half the market. In fact, Comcast on its earnings call last week said Peacock had the most sports streaming minutes, a reflection of the summer Olympics last year.
Still, why would Iger entertain another run at a Venu type offering when the first go around ended so poorly? One reason could be it’s a different structure. In Venu the three companies were contributing their channels to be essentially simulcast through the new Venu app. Here lets say Fox’s new app, the new ESPN app and Peacock agree to offer the three combined at a discount. Would that invite antitrust scrutiny?
One of the logical entities to bring such a case – Fubo, because of its reliance on sports – is soon to be part of Disney. And the Venu antitrust case never was fully adjudicated. Many sports lawyers contend the judge mistakenly halted the Venu launch because arguably Fubo did not have standing. This is because a bedrock of antitrust law is that it does not protect businesses against competition, only consumers.
Bob Iger called the NFL deal the most important moment for ESPN since 1987 when the network went from a half to full season of NFL games. It’s not hard to see why: not only does ESPN get access to six more NFL games, Disney is all but assured now of not losing rights to the league. Plus the deal will be immediately accretive to Disney’s results, with Iger describing the transaction as almost like a financial windfall.
“The revenue that we will derive from distributing the NFL Network and from distributing other NFL properties will obviously increase our revenue and increase our operating income for the ESPN business,” he said. “That does not even factor in a potentially low churn rate for the ESPN app once we go to market and once the NFL games are all included, and obviously there’s advertising value as well. I probably could go on and on because there are many different elements to this, but it’s extremely exciting.”
Despite the heady words and big deals, Wall Street, at least right away, is not sure. Disney’s shares were trading lower by about 4 percent in a slightly up day for the market.
About Daniel Kaplan
Daniel Kaplan has been covering the business of sports for more than two decades. A proud founding reporter of SportsBusiness Journal, he spent the last four years at The Athletic.