Disney Drops Plans To Spinoff ESPN: Report

Zinger Key Points
  • The company is reportedly concerned over live sports presentations on Amazon and Apple's streaming services.
  • Reports of an ESPN spinoff began to percolate in October.

The Walt Disney Co. DIS has reportedly scrapped a rumored plan to spin off ESPN.

What Happened: Disney’s focus on keeping ESPN within its portfolio is the result of efforts by rival companies Amazon AMZN and Apple AAPL to obtain streaming rights to live sports events for their respective streaming services, according to industry-focused news site Puck citing an unnamed executive.

“This sudden turnaround almost certainly reflects a recognition that live sports, the linchpin of the entire linear ecosystem, will be even more significant to Disney’s bottom line in a world where the streaming landscape is uncertain,” wrote Puck’s Dylan Byers in a report from the Sun Valley Conference 2022 in Wyoming.

Disney did not comment on the Puck report.

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Why It Matters: ESPN became a Disney through the 1996 acquisition of its then-parent company Capital Cities/ABC Inc.

Last October, Puck cited two unnamed sources who claimed there were “conversations happening regularly at Disney about whether or not to spin off ESPN.” The sports media brand is said to be burdened with “zero-to-low-growth business” due to a near-future of diminished subscriber levels and advertiser revenue.

Disney CEO Bob Chapek reportedly grew concerned over “expensive, long-term rights deals that keep the most popular sports programming on linear and off of ESPN+.”

The Puck report created a brief stock pop, with Disney shares rising by as much as 2.6% when the story went live. However, the story was quickly shot down by CNBC, which offered its own unnamed source to refute Puck’s coverage.

Trading Action: Disney shares opened for trading this morning at $97.43, and the company's shares have been trading between $92.01 and $187.58 over the past 52 weeks.

Photo: Josh Hallett / Flickr Creative Commons

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