Disney (DIS) — The ESPN News That I Wanted… Finally – January 13, 2024
Consistent readers know: I saw Disney selling a stake in ESPN to a powerful partner as vital for the longevity of that network. I have demanded this as a requirement to remain a shareholder. Well? News struck Friday night that put a large smile on my face.
Disney’s ESPN is in advanced talks with the NFL on a deep, new partnership. As part of it, the NFL would own a stake (likely a minority stake) in Disney. In exchange, Disney will assume total control of the NFL’s media properties including the NFL network and RedZone. Disney will gain preferential distribution for NFL games and content such as the immensely popular RedZone product. News outlets shared that the partnership would “streamline distribution of league broadcasts” with control over its media business. That implies Disney will control future game & content bidding as well as ad sales. I eagerly and excitedly await more details. It’s unclear how this will impact Google’s NFL Sunday Ticket rights if this deal closes as expected. That deal will likely have to expire (in 2030) before Disney takes control of it.
Why does this matter? First and foremost, it will give Disney’s planned ESPN streaming service exclusive access to highly valuable content in the USA without having to openly bid against richer competition for the rights. That will inevitably make the service a lot more successful. Incredibly, all 8 of the top viewed titles in the USA in 2022 were NFL games. This is by far the most powerful sports league in North America. We friggen’ love our football, myself included (go Lions). It’s a fan base with perhaps unmatched passion and should allow Disney to focus more on continuing to win lucrative college football, Olympic and March Madness rights as well. This solves the content problem and will guarantee long term NFL content rights for Disney without regular bidding wars.
Now, instead of competing with Amazon and others to see who can spend the most, it has partnered. Disney is David and not Goliath in this equation. How can David win? With powerful friends like the NFL and full control over its content. It’s like legal cheating.
This just leaves Disney’s streaming distribution issue. Disney will lose consolidated traffic sources like Xfinity and Spectrum when cutting the cord on ESPN. So? I would still love for them to sell another stake in the company to mega-cap tech or Verizon. The news that broke clearly depicts that these talks are still ongoing. Partnering with the NFL and a distribution outlet like Amazon is not mutually exclusive here.
Finally.
Source: Brad Freeman proprietary research
