As Disney searches for a strategic partner to purchase an equity stake in ESPN amid shifting revenue streams, it will reportedly target a technology company. Andrew Marchand of the New York Post says that telecommunications companies including T-Mobile and Verizon are in play, in addition to technology giant Microsoft. Moreover, companies that have become involved in the sports media space through live broadcast rights and other media packages are in consideration, such as Amazon (Thursday Night Football), Apple (Friday Night Baseball; MLS Season Pass) and Google (NFL Sunday Ticket).
The minority investment will aim to broaden distribution as ESPN works on executing “Project Flagship,” a plan to unveil a direct-to-consumer offering. Sources told The Post that the launch is expected to take place sometime in 2025, but no later than 2026.
ESPN once reached over 110 million homes but has been subject to the effects of cord-cutting, which eclipsed a record in the first quarter of this year. Through the second quarter, Guggenheim affirms that distributors are down 3.2 million people over the last 12 months, marking a stark contrast and threatening the viability of the business. The “Worldwide Leader” now reaches approximately 72 million homes, and even with the new DTC product, still plans to keep its presence on linear television.
If it strikes a deal with Apple, ESPN could come as a preloaded product on new iPhones or other devices. This would represent an ostensible advantage for the network since the technology company has 57.4% of the U.S. market using its cell phones. Since many people see products from technology companies as a quotidian necessity in their lifestyles, the distribution of networks could, theoretically, be augmented by means of partnership.
Previous reports stated that ESPN could partner with one of the major professional sports leagues, which could presumably make securing live broadcast rights easier in the future. The network’s deal with the NBA expires after the 2024-25 regular season, with renewal talks expected to begin soon. The league is introducing a new in-season tournament featuring group play and knockout rounds, with games to be televised by ESPN/ABC (The Walt Disney Company) and TNT (Warner Bros. Discovery).
ESPN, seen as its own distinct business entity under Iger’s reorganization of The Walt Disney Company, will report its own earnings for the first time this November. No deal is imminent, but the report conveys that Disney values its lead sports property between $40 to $50 billion. A 10 percent stake in ESPN, as a result, would be valued at $4 to $5 billion, expenditures that technology companies could afford after leading the stock market in the second quarter. This helped accentuate 34.2% growth in the NASDAQ, exceeding the percentage value it lost last year.
