A report from Reuters indicates that ESPN could secure an enterprise value of $24 billion and attract investment interest from sports leagues, tech firms like Apple and telecom majors including Verizon.
What’s Happening:
- In a bid to lure an outside investor, the media giant last month disclosed the financials of ESPN that revealed declining sales and profit at the network considered to be the crown jewel of its traditional TV business.
- Disney CEO Bob Iger previously stated that ESPN was core to Disney’s business, and wanted to create a streaming app for it by either forming a joint venture or finding a buyer for a minority stake in the network.
- A 36% interest in ESPN could potentially be up for sale, that is assuming Disney intends to retain a 51% majority interest, while also accounting for media company Hearst's 20% stake.
- Possible interested parties include the NFL, NBA, as well as newcomers to the live sports business, such as Apple and Amazon, and distributors like Verizon and Comcast.
- Disney could have a lot to gain from the deal, with more capital allowing ESPN to strengthen its offerings, keep the option of a spin-off open and help the network focus on high-growth streaming.
- Rising cord-cutting has hit the linear television business, and acquiring sports rights has become an increasingly expensive affair, with future sports rights expected to be north of $69 billion.
- "ESPN is still a strong business and a premier brand, but it sits at the nexus of possible major business transformation. Transitions have historically proven difficult and typically not conducive to significant growth," a note from BofA Global Research said.