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Disney is pressured to sell ESPN ... again

Tim Baysinger
Aug 16, 2022
Illustration of a vintage television split with a modern smart television.

Illustration: Gabriella Turrisi/Axios

Disney is once again faced with a decision on ESPN's future following pressure from an activist investor.

Why it matters: ESPN has been a reliable cash cow for decades, but questions remain about its financial value going forward as TV subscriber numbers keep shrinking.

Driving the news: A new push to spin off ESPN came Monday when activist hedge fund manager Dan Loeb revealed a new stake in Disney. Separating the sports networks is one of his top demands.

  • Disney has reportedly eyed an ESPN spinoff, but ultimately hedged against selling the asset, as it has proven critical not only to its cable revenues but its bundled streaming product.
  • Loeb, however, argues the company could reap much more value from the asset if it is separated and combined with a sports betting company.

Catch up quick: Disney shunned gambling under former CEO Bob Iger. His successor has been much more willing to wager on the betting space.

  • Last year, ESPN was seeking at least $3 billion to license its brand name to sportsbooks including Caesars Entertainment and DraftKings.
  • Disney CEO Bob Chapek admitted that ESPN needs to "seriously consider getting into gambling in a bigger way" and even alluded to some kind of deal coming soon during last week's earnings call.

Yes, but: Disney is wary of intertwining its family brand too much with gambling.

  • "ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting," Loeb wrote in his letter.

What's next: Merging with a sports betting company could soften the blow of cord-cutting and set ESPN up to capitalize on one of the few growth markets in the media space.

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