If the latest round of layoffs at ESPN weren’t enough to convince you that the business is struggling to maintain the profits of yesteryear, a quick look at the company’s quarterly financials will paint a pretty clear picture.
Disney will report earnings for the second quarter of 2026 next week, but looking back to the first quarter, the company’s sports division, comprised almost entirely of ESPN, saw its operating income decline by 23 percent over the same period in 2025. Some of that decline can be attributed to a protracted distribution battle with YouTube TV, which cost Disney some $5 million each day it stretched on.
Since Disney began reporting operating income for its sports division separately in FY22, performance from the segment has been bumpy. The sports segment began with $2.7 billion in profits in 2022, dropped to $2.5 billion in 2023, then $2.4 billion in 2024, before rebounding to $2.9 billion in 2025.
Considering the number of households that continue to cut the cord, the 2025 rebound is commendable. However, as fewer people subscribe to pay-TV bundles and the cost of live sports rights continues to increase, continuing an upward trajectory seems like a challenge.
ESPN chairman Jimmy Pitaro was asked about this directly during an interview with CNBC’s Alex Sherman last week. In addressing ESPN’s financial challenges, Pitaro pointed to the network’s surging ratings amid an overall decline in pay-TV subscribers.
“We just announced this morning that ratings for the first half of 2026 were the best since 2012. So that’s in a world of cord-cutting, where fewer households are watching television, our ratings are up significantly,” Pitaro said.
The chairman then pivoted to the launch of ESPN’s direct-to-consumer app last August, which brought ESPN’s linear networks to streaming for the first time. The premium version of the app, which has become colloquially known as ESPN Unlimited, includes exclusive live content and the troves of other programming that was previously available via an ESPN+ subscription. Pitaro described ESPN Unlimited as being additive to both the pay-TV ecosystem, as it is included in many cable and satellite bundles, and the a la carte streaming ecosystem. As he’s said before, the company is “agnostic” to how people purchase ESPN.
But after running through the familiar talking points, Sherman posed a different question to Pitaro.
“Is the rate of subscribers that are subscribing to the DTC product, is that rate above the rate of cord-cutting?” the CNBC reporter asked.
“Yeah, so I can’t, you know this- we don’t report our numbers publicly. So I can’t comment on that,” Pitaro answered. “For us, again, the important point is we’re going to judge ourselves holistically on the total number of households that are subscribing to ESPN. That means pay television, it means ESPN standalone direct-to-consumer, it also means ESPN as part of a bundle, a DTC bundle.”
Whether ESPN’s direct-to-consumer revenue can recoup lost revenue from the pay-TV bundle is, of course, the billion-dollar question. It seems that, at least based on Disney’s sports segment operating income, the new app lifted the network’s financials a bit. But as ESPN stares down NFL rights fees that could increase by billions, a decade of steadily rising NBA rights fees, a new $1.3 billion College Football Playoff deal, and countless other media rights commitments, it’s a wonder whether ESPN was simply able to pull a rabbit out of its hat in 2025, or if the network can continue to maintain or grow its operating income into the future.
Most experts would likely agree that’s a tough ask.
About Drew Lerner
Drew Lerner is a staff writer for Awful Announcing and an aspiring cable subscriber. He previously covered sports media for Sports Media Watch. Future beat writer for the Oasis reunion tour.