As part of its strategic shift toward a streaming model, ESPN, owned by Walt Disney Co (NYSE:DIS), is considering potential partnerships with professional sports leagues.
Preliminary talks have been initiated with the National Football League and the National Basketball Association by Disney CEO Bob Iger and ESPN head Jimmy Pitaro, CNBC reports, citing people familiar with the matter.
“Our position in sports is unique, and we want to stay in that business,” said Iger. “We’re going to be open-minded about looking for strategic partners that could either help us with distribution or content. I’m not going to get too detailed about it, but we’re bullish about sports as a media property.”
The NFL, which is actively seeking an investment partner for its media assets, including NFL Network, NFL.com, and RedZone, has been involved in these initial discussions. Meanwhile, the NBA, which has a longstanding relationship with Disney, is open to further discussions about the future of their partnership, the report said.
Disney and Warner Bros. Discovery, Inc. (NASDAQ:WBD) hold exclusive rights to negotiate with the NBA until next year. As ESPN transitions to a streaming model, Disney is considering selling a stake in the business, with Iger suggesting that a partner could add value in terms of content or distribution.
Discussions have also explored the possibility of a subscription streaming service jointly owned by multiple leagues, which could offer consumers innovative ways to consume content and new game packages.
Such a move could potentially lead to conflicts of interest for the leagues, as owning a stake in ESPN might upset Disney’s competitors, such as Comcast’s NBCUniversal (NASDAQ:CMCSA), Fox Corp. (NASDAQ:FOXA), Amazon Inc. (NASDAQ:AMZN), Paramount Global (NASDAQ:PARA), and Apple Inc. (NASDAQ:AAPL), all of which are involved in bidding wars for sports rights.
Despite potential challenges, Disney is forging ahead with its plans to transition ESPN into a digital-first, streaming entity. Selling a minority stake in ESPN to the leagues could help Disney compete with tech giants like Apple, Google, and Amazon, while also ensuring a steady stream of premium content from the leagues.
“If [a partner] comes to the table with value, whether it’s content value, distribution value, whether it’s capital, whether it just helps derisk the business — that wouldn’t be the primary driver — but if they come to the table with value that enables ESPN to make a transition to a direct-to-consumer offering, we’re going to be very open-minded about that,” said Iger.
Produced in association with Benzinga
Edited by Alberto Arellano and Joseph Hammond
