Bob Iger, chief executive officer of The Walt Disney Company, divulged to investors that its sports arm, ESPN, is looking for a strategic partner to purchase an equity stake in the network. The decision to move in this direction comes as the “Worldwide Leader” has seen its cable distribution drop to 71 million households and more people continue to cut the cord. In fact, cord cutting has caused significant subscriber drops across the board for cable networks as they work to produce viable digital platforms. Now, a report by Sahlil Patel at The Information has linked wireless network operator Verizon to the “Worldwide Leader.”
Iger, nor ESPN Chairman Jimmy Pitaro, has divulged the companies the network has conversations with regarding a partnership. Some reporting has connected ESPN with sports leagues, which could redefine the process of attaining broadcast rights, along with various technology companies. Verizon could prove to be the right match, as its network of over 100 million subscribers could potentially be included in a deal.
At the moment, it remains unknown how much equity would be purchased by a strategic partner should the network be able to close a deal. Eighty percent of the network is owned by The Walt Disney Company, while the remaining 20% is owned by Hearst Communications.
Verizon would reportedly be interested in working with ESPN on a streaming service, which could indicate the forthcoming direct-to-consumer product. The company’s chief executive officer Hans Vestberg has told executives with sports leagues and teams that the company is exploring a partnership to help launch a new streaming version of the sports channel.
ESPN is working on launching its own direct-to-consumer platform under “Project Flagship” while also receiving a cash infusion through its 10-year, $2 billion deal with Penn Entertainment to create the ESPN BET sportsbook.
Even with changes in distribution, the company’s sports revenue is up 10% year-over-year, with Iger affirming that the business is still “a good value proposition.” ESPN is expected to report its earnings for the first time in November, as it was categorized as its own distinct entity under a strategic reorganization by The Walt Disney Company.
