The Walt Disney Co. CEO Bob Iger told analysts he wasn’t overly concerned that the company’s new streaming sports venture would accelerate cord-cutting.
Wall Street has been concerned the sports venture, announced Tuesday, would further damage linear TV, and most media stocks were down on Wednesday.
Responding to a question on Disney’s fiscal first-quarter earnings call Wednesday, Iger said the new sports venture was aimed at consumers who either have already cut the cord or never subscribed to pay TV.
While linear channels are eroding, Iger added, Disney has streaming services that will pick up the slack and minimize any potential financial consequences.
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“Understand that we are going to get paid in this new joint venture for our channels at a level that’s commensurate with a level that we get paid for those channels in the multichannel ecosystem,” Iger said. “So if a consumer moves out of [pay TV] and then into this, then what we get paid for the channels that are in it is equal to what we get paid [by traditional distributors].”
Iger acknowledged that Disney has channels that will not be included in the sports bundle, but said the economic impact of those networks losing subscribers would be “de minimis” to the company.
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“We're backstopped in all the channels with the content that exists or that we ultimately put on Hulu and Disney Plus,” he said. “So for us, it’s very low-risk and actually, as I talked earlier, potentially quite accretive to us in terms of signing up sports fans that have never signed up for the bundle or that might no longer want it.”
On the call, Disney was bullish on the sports business in general and ESPN in particular.
Iger announced that Disney would be rolling out a direct-to-consumer version of ESPN in fall 2025. The DTC service will make ESPN’s channels available via streaming to people who aren’t subscribed to pay TV.
“That will be a very, very immersive, obviously sports-centric app, which will have features that this combination with Fox and with Turner Time Warner Discovery will not have, such as integrated betting, integrated fantasy, likely to have some sales arm or merchandise capabilities, obviously a deep dive into stats, and high degree of customization and personalization,” he said. “That will make the product compelling to younger sports fans in particular.”
Iger noted that the DTC version of ESPN will be available as an add-on to Disney Plus, similar to the arrangement now in the works with Hulu.
Bundling leads to higher engagement, lower churn and greater advertising potential, he said.
“We've already seen an incredible response to the beta launch on Hulu for Disney Plus, which has far exceeded every metric,” he added.
Disney continues to look for content and marketing partners for ESPN.
“We've made progress towards securing deals and we expect to have more to share with you in the near future,” he said.
“Ultimately our mission is to make ESPN into the preeminent digital sports brand, reaching as many sports fans as possible and giving them even more ways to access the programming they love in whatever way best suits their needs,” he said.
