No matter how you feel about ESPN, you have to give the network credit. Knowing that Disney’s detractors and the “stick to sports” crowd will pounce on any bit of not-overwhelmingly-good news for the network, Bob Iger and company chose to release ESPN-specific financial data for the first time ever. While the network is still very healthy, profits and revenue are down year-over-year.
That is information that will be used against ESPN and Disney by both critics and the leagues it does business with in future negotiations. What do the numbers really tell us though?
Releasing financial data is a good sign that Disney is motivated to sell at least some percentage of the network. Any potential buyer is smart. They get the struggles of the cable television industry and the general trend in the media business. Profits and revenue are not going to be what they were five or ten years ago.
So what is it that tech giants, private equity firms and other media companies are paying attention to? They want to know that ESPN is a product worth their investment. What the numbers show today matters, but those companies aren’t just processing the numbers.
If Disney is bringing in an outside partner, everyone on the ESPN payroll better be prepared for change. Any amount of influence over a $13 billion business is going to require significant investment, and no business is dropping that kind of money to be hands-off with ESPN.
ESPN has brand equity and is the most valuable name in sports – not sports media – but in sports. Revenue is only down a little over 1.25%. Profits still eclipse $2 billion. We still have a little over two months left in 2023 and the network has already generated over $12 billion. The people using the information to make content will focus on the word “down.” The people using the information to make investments will focus on the word “billion.”
Disney has spent most of 2023 cutting costs as it deals with the realities of spending more than $71 billion to acquire FOX’s entertainment assets. Every division of the company felt the pain. Only ESPN saw dozens of employees receiving pink slips while it was simultaneously courting Pat McAfee with a reported $85 million contract. That brought plenty of scrutiny from people inside and outside of Bristol.
What ESPN was doing though seems pretty clear now. In a world with less money being doled out via cable subscription fees, it was solidifying what makes the network one of the most valuable around – star power.
ESPN is doubling down on what its competitors do not have and what the market demands. It has the most popular young personalities. Remember that in addition to signing McAfee, it also inked extensions with Mina Kimes and Marcus Spears. The network also added more screen time for Scott Van Pelt and Doris Burke. It added McAfee and Shannon Sharpe to First Take, which should increase the morning show’s lead over FS1’s Undisputed, which is sure to make Stephen A. Smith, even if he is not yet in a position to negotiate a new deal.
That star power isn’t just about people though. All four of America’s major pro sports leagues air on ESPN, with the NBA likely to come to terms on a new deal with Disney. Buzz-y properties that have gained a following with younger fans like the WNBA, Formula 1 and Slam Ball are on ESPN. Next year, the SEC, arguably the best conference in college football, becomes the exclusive broadcast property of ESPN and ABC. To prepare, the network locked down all three members of its top college football crew.
ESPN has the people, the games, and the name recognition. The numbers prove consumers are still responding. Regardless of how they consume ESPN in the future, the building blocks are there to be successful.
There will be a bold new vision for ESPN. It could come from a prospective investor or buyer. It may simply be focusing on the launch of the so-called “Project Flagship” and the revenue generated by offering the network as an over-the-top subscription service that doesn’t require a cable or satellite package.
Regardless of what that vision is, getting there will require a period of transition and what ESPN is showing us is that the product is strong enough to weather that storm.
A drop in profits is undeniable and ESPN isn’t running from it. But these numbers are not something that Bob Iger and Jimmy Pitaro need to be sweating.
Disney has been more upfront than ever about its intention to give up some percentage of ownership in ESPN and every decision the company has made regarding the network since announcing that it would become its own division of the Walt Disney Company has been with that goal in mind. These financial figures are not part of some kind of competition. The public is welcome to look, but unless you have the capital to buy a piece of the product, your opinion is irrelevant.
Demetri Ravanos is a columnist and features writer for Barrett Media. He is also the creator of The Sports Podcast Festival, and a previous host on the Chewing Clock and Media Noise podcasts. He occasionally fills in on stations across the Carolinas in addition to hosting Panthers and College Football podcasts. His radio resume includes stops at WAVH and WZEW in Mobile, AL, WBPT in Birmingham, AL and WBBB, WPTK and WDNC in Raleigh, NC.
You can find him on Twitter @DemetriRavanos or reach him by email at DemetriTheGreek@gmail.com.
