Oct 18, 2023 - Economy

Disney reveals size of ESPN's biz for the first time

Photo illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images

ESPN drives more annual profit for Disney than the entirety of Disney's entertainment business, according to a new regulatory filing.

Why it matters: Disney is looking for a strategic partner to help ESPN manage its transition into the streaming era. The network's high profit margins may help explain why Disney isn't looking to sell the asset completely.

By the numbers: ESPN delivered more than $16 billion for Disney's fiscal year 2022 (which ended on October 1, 2022) and $2.9 billion in profit. The vast majority of that income came from its domestic business.

  • By comparison, Disney's entertainment business, which includes its streaming services, linear TV networks and TV and movie studios, brought in $39.6 billion in revenue and $2.1 billion in profit during that same time period.

Yes, but: The data shows just how much ESPN's business relies on carriage fees from cable TV providers over advertising.

  • ESPN makes up most of the revenue within Disney's "Sports" segment. Within that segment during Disney's fiscal year 2022, the majority of revenue came from affiliate fees that cable programmers pay to distribute ESPN ($10.79 billion) versus advertising ($4.4 billion) and subscriptions and other forms of income ($2.1 billion).
  • Carriage fees are becoming tougher for TV networks to negotiate as cord-cutting accelerates, as was made evident by a messy financial dispute between Disney and Charter last month.

Flashback: Disney CEO Bob Iger announced a sweeping restructuring of the business earlier this year, essentially undoing most of the organizational changes made under former chief executive Bob Chapek.

  • As part of those changes, Disney said it would divide the company into three parts: entertainment (Streaming, TV and movie studios and, TV networks), sports (ESPN) and experiences (parks and products).
  • The new structure, Iger noted, would return greater authority to the company's creative leaders and would make "them accountable to how their content performs financially."

The big picture: The data also shows how much Disney's streaming efforts have eaten into the profit margins of its entertainment business.

  • Disney has told investors that it expects its streaming efforts to turn a profit by 2024.
  • The company said last month it nearly doubled its investments in its theme parks and cruise lines. Disney's experiences division earned $28 billion in revenue for the fiscal year 2022 and $7.2 billion in profit.

Go deeper: Disney-Charter deal "reimagines" the TV bundle

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