Disney: A New Era

From “ESPN: Looking For Strategic Partners” (July 2023):

“I wrote about the long-term strategic evolution of ESPN for the first time in June 2018, and CEO Bob Iger first spoke about the ‘inevitability’ of an ESPN direct-to-consumer (DTC) offering on a May 2017 earnings call. More than five years later, there’s a long way left to go on the linear to DTC transition. While Disney has made significant progress with its entertainment assets, there are still massive obstacles in the live programming businesses… Whether you’re willing to wait for greener pastures likely depends on your thoughts on the size of the prize, as well as the likelihood of success and the time horizon for achieving that outcome… I continue to believe Disney has attractive long-term opportunities in DTC – but they also have the most at stake as traditional linear pay-TV (MVPD’s) continues to lose relevance.”

I’ve waited many years to write this sentence: ESPN’s DTC offering will launch next week (on August 21st). In advance of that launch, the company announced significant new deals with the NFL and the WWE (for premium live events, or PLE’s). Importantly, they’ve also culled certain rights deals that were not pulling their weight, most notably the $550 million MLB package.

This isn’t just a critical moment for Disney’s sports distribution business; it is a turning point in the broader evolution of their video businesses, which I’ve been clamoring for since 2021. It took a long time to get here, for reasons I’ve written about on numerous occasions (some of which management deserves blame for, and some which were outside of their control). What matters now is to prepare for the impending impact as Disney embarks on this new era.