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The Walt Disney Company Reveals ESPN’s Financial Data

Reports throughout the summer indicated that The Walt Disney Company would release financial data for ESPN as part of the company’s strategic reorganization of its business into three unique sectors. Those metrics were officially divulged to the public late Wednesday. The numbers come at a time when Disney is working to find a business partner to purchase a minority equity stake in ESPN. The company currently owns 80% of the sports media network while the other 20% is under the purview of Hearst Communication.

Disney shared that the sports earning segment for ESPN consists of eight ESPN branded television channels, ESPN programming on the ABC Network and the ESPN+ direct-to-consumer video streaming service. Sources of revenue within the sector include affiliate fees, advertising, subscription fees and various other profits yielded through pay-per-view events, programming and brand licensing. Operating costs, depreciation and amortization are some of the factors that are within the expenses of the category. In an interview with Barrett Sports Media ahead of the long-anticipated release, ESPN President of Content Burke Magnus gave his thoughts on what insights consumers would be able to extrapolate from the numbers.

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“People will get a look into the ESPN business like they’ve never had before, at least from a financial perspective,” Magnus said. “I think they’ll understand through those reports just how complicated our business is, but at the same time, just how dynamic and how healthy in many ways our business is.”

For the nine months ending on July 1, 2023, ESPN generated more than $12.56 billion in revenue, a testament to the strength of its broad sports portfolio which includes the National Football League and National Basketball Association. The network earned just over $4 billion in revenue in the fiscal third quarter, which is down from the first two fiscal quarters in 2023. While revenue for the network is up by approximately 2.26% year-over-year (YoY), operating income is down 8.35% YoY, equating to $1.89 billion.

As a whole, Disney’s sports segment attained more than $13 billion in overall revenue over the first three fiscal quarters, the other $500 million emanating from Disney Star in India. The sports segment reported revenues of $13.2 billion through this time, down 1.26% YoY. Its operating income equated to $1.48 billion over the same nine-month stretch, down 19.65% YoY.

In fiscal year 2022, which ended in October of last year, ESPN was responsible for $16 billion in revenue and had overall profits of $2.9 billion. Disney’s entertainment division, which includes other television networks and streaming services, along with film and television studios, had higher revenues of $39.6 billion. Conversely, its profits equated to $2.1 billion, diminished because of losses in the streaming business.

At the end of fiscal year 2022, the sports segment collected $10.8 billion in affiliate fee revenue, $4.37 billion in advertising and $1.11 billion in subscription fees. Its operating income totaled $2.71 billion, still finding a way to continue profiting in sports media despite a changing business.

Through the first nine months of fiscal year 2023, the segment has already surpassed its earnings in subscription fees, revealing in the SEC filing that it had garnered approximately $1.14 billion in revenues in that subset. Affiliate fees are down by just over 1.2% YoY, totaling $8.05 billion at this time on the calendar, while advertising revenue is down 12.2% YoY to $3.19 billion.

According to The Walt Disney Company’s last quarterly earnings report, ESPN+ has 25.2 million subscribers, slightly down from the prior quarter (25.3 million). The average monthly revenue per user on the streaming service also declined from $5.64 in Q2 2023 to $5.45 in Q3 2023. Additionally, a recent cable carriage estimate stated that ESPN is available in 71.321 million households, continuing a decline precipitated by cord cutting that the company hopes to offset through the development of its own direct-to-consumer (DTC) service, currently known as “Project Flagship.”

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