There is a giant “Open for Business” sign hanging in neon lights outside of the Bristol campus of ESPN as Disney searches for potential strategic partners to invest revenue into the business. It’s been trying times on the business side for ESPN in recent years with mass layoffs affecting big names, cable subscriptions continuing to fall, rights fees fragmenting, and the continued evolution of the streaming era.
Disney has done more posturing publicly than ever before on separating ESPN from the rest of their business and looking for partners to help it further evolve in the streaming era. Those potential partners range from tech companies to the sports leagues that ESPN televises themselves.
But if ESPN were to be spun off in some capacity or a portion were to be sold to an investor, what could Disney bring in? An estimate from Bank of America places a hefty valuation on the company as one might expect for the sports media giant. Just how much? Try $24 billion.
Via Forbes:
Disney’s sports broadcasting network ESPN could be valued at about $24 billion, according to a Bank of America analyst note, which said potential investment suitors like Amazon, Apple and Verizon could help manage Disney’s push to transition from linear TV toward streaming.
[…]
Disney—which owns 80% of ESPN, while Hearst holds the remaining 20%—could sell stake in the company to new investors assuming it intends to maintain majority ownership, according to the note.
The note added a partnership deal between Disney and another company could help Disney bridge the gap to a streaming version of ESPN, bring a capital infusion that could bolster ESPN’s offerings and give Disney a chance to spin off ESPN in the future.
To put that number in perspective, crypto platform FTX was valued at $25 billion back in 2021. Ok, maybe that isn’t the best comparison…
While $24 billion may seem like a great, big, huge number that’s more expensive than any sports franchise in the country, it’s actually representative of a significant decline in valuation for ESPN. Less than 10 years ago back in 2014, ESPN was valued at an estimated $50 billion dollars, twice what it is today. As Awful Announcing wrote in 2014, the reason for ESPN’s high valuation was their sturdy revenue stream built on cable subscriptions that gave them a built-in advantage over everyone else in the media world. At the time, it seemed like ESPN’s dominance would never end because of it.
ESPN’s secret weapon, as it has been for a number of years, is their continually increasing subscriber fees. The network charges over $5 per subscriber per month, which is over four times more expensive than the next highest cable channel. That’s a guaranteed source of revenue ESPN can count on before a ball is kicked, before a pass is thrown, before LeBron tweets and a major reason why their executives feel so secure in their place at the top of the world.
Of course, in 2023, that business model has been turned upside down. What has served ESPN so well can no longer be relied upon for the next decade. ESPN’s cable subscriptions have plummeted from a peak of 100 million homes at the beginning of the 2010s all the way down to 72.5 million homes in 2023. That drop with potentially more to come is why ESPN is so desperate to find new revenue streams, whether it be from streaming, tech partnerships, or sports betting. And it’s why the future is as cloudy in Bristol as it’s been for decades.
[Forbes]
