New Disney CEO defends ESPN amidst sports losses
Credit: CNBC
ESPN has been through its biggest transformation in company history. And new Disney CEO Josh D’Amaro is being pressed on whether the worldwide leader in sports is still part of his company’s future.
The latest question came during a sitdown with CNBC at Disney’s D23 fan club event, his first sitdown with the business network since taking the reins from longtime chief and new Los Angeles Lakers co-owner Bob Iger. Disney’s ownership of ESPN has been in the spotlight as the network attempts to somehow navigate an environment of rising rights fees, cord-cutting, and a shift to streaming. ESPN has also sold a 10-percent stake to the NFL as part of an equity deal as part of its repositioning for the future.
But skeptics of ESPN’s long-term future as part of the Disney family will point to the company’s Q3 2026 earnings, in which its sports department fell by a whopping 17 percent. While the executives on the earnings call highlighted ESPN’s ratings increases for the NBA Finals and the strength of their portfolio, it’s clear that Disney is still trying to figure out how to best position the new ESPN Unlimited within its streaming empire, including Disney+.
And in the interview with CNBC, D’Amaro stated, when asked about the decline, that he wants more sports to move to Disney+ to reach more casuals. He also affirmed his stance that he has no interest in spinning off ESPN.
Well, I have been clear that I’m not interested in spinning off ESPN. I think that anybody in the industry would look at our sports rights and the fandom associated with sports right now, and you can’t help but be jealous of what we have here. I mean, ratings are through the roof. The NBA Finals, the NHL Finals, like, we have never seen ratings like this before. And I have been clear that I think it should be part of the ecosystem. In terms of how it becomes part of the ecosystem, I talked about in the Q3 earnings report that we will start to bring more sports over onto Disney+. So, that casual sports fan will have an opportunity to engage on that front, create more stickiness on the Disney+ platform. And then in terms of sports rights, I think that the ESPN team has been really smart about going after those rights that are most important to our business, the highest-quality sports rights, and we will continue to remain focused on that.
Corporate spinoffs have been all the rage with the entertainment monoliths in recent times. NBCUniversal spun off its cable networks into Versant, leading to the creation of USA Sports. Warner Bros. Discovery was ready to do the same before it was gobbled up by the growing Paramount media empire.
ESPN is still clearly entrenched at the top of the sports world, whether it be linear or streaming. The company has a rights portfolio, brand recognition, and reach that is simply unmatched by any competitor. But as we have seen in recent years, no company can pick and choose everything they want because of the harsher, tougher conditions facing all media. It’s an incredibly challenging reality to be caught in the middle of astronomically rising rights fees (see the new NBA and future NFL deals) amid the collapse of cable and satellite subscriptions that had been the bedrock of ESPN’s profit structure for years.
And even though ESPN and Disney may be better positioned than their rivals to withstand those challenges, it still might not be enough to turn the corner. At least not yet.
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