According to a Thursday morning report by CNBC’s Alex Sherman, the National Football League has had discussions about buying a 10% stake in ESPN, as the two entities are currently working on an arrangement for ESPN to take over NFL Media. Previously, The Athletic reported that the two sides are now “the closest they have ever been” to agreeing on a deal that would grant ESPN control of the league’s media vessels, including NFL Network and NFL RedZone.
Furthermore, Sherman noted on CNBC this morning that the potential deal could be a combination of equity and cash.
“The reason we’re talking equity here is that ESPN needs all the cash it can get to buy sports rights. These talks for the league to take a stake in ESPN have actually been ongoing for years,” said Sherman Thursday on CNBC. “This was a story I broke two years ago where ESPN actually had talks with all four major sports leagues. Those talks have really narrowed in on the NFL in the past year or so. You can see why. If you were ESPN, you may want the league to take a stake in you.”
Additionally, the CNBC sports business analyst said the potential investment by the NFL into ESPN could signal that ESPN will continue to bid for rights from the league with comfort, knowing they’re a bought-in partner.
Regarding the future of NFL Media and the reporting by The Athletic, Sherman notes that the NFL has been attempting to find a suitor for NFL Network for some time now.
“The NFL did not want to run these NFL media assets anymore, so they’ve been looking for a buyer for them for years,” said Sherman. “That was sort of the carrot here, which made this to be somewhat of a one-off when the NFL was looking to unload assets.”
Despite the ongoing talks between NFL Media and ESPN—which will require regulatory approval that could take some time—there remains risk for the NFL in investing in ESPN, as subscriber counts continue to fall due to the rise of cord-cutting.
“ESPN, at its core, is still a legacy media company. That is a cable company first, and those subscribers are shrinking,” said Sherman. “If you’re taking an equity valuation in this company, naturally, you think that the valuation will grow over years. Certainly, depending on which analyst you speak to, you don’t always get the same answer with ESPN.”
At this time, exact details remain unknown about the specifics of the discussions between ESPN and the NFL regarding the sale of NFL Media. So far, the NFL has not commented on the reporting by CNBC or The Athletic.
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ESPN had one small shred of integrity left. This will clinch it’s completely gone. A league owning part of a network. What could possibly go wrong? So much for journalistic integrity. But then I guess ESPN already blew that out of the water with Steven a hole and McAfee.