Disney’s Not Parting With ESPN

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What's going on?

Disney said over the weekend that it’s going to hold onto ESPN, despite calls to sell the sports network.

What does this mean?

The term “activist investor” doesn’t refer to an eco-warrior with a penchant for stocks: it’s an investor who buys into a company with the aim of changing it – by selling an arm of the company’s operations, for example. That’s exactly what activist investor Dan Loeb called for Disney to do after his hedge fund amassed a $1 billion stake in the media conglomerate last month. Spinning off ESPN – and its stagnating growth – could help the company reduce its mammoth $46 billion debt, but Disney sees things differently. The company boasted of ample interest from parties keen to buy ESPN – a sign, Disney claimed, of the network’s potential. Disney even has some hot new directions for ESPN on the cards apparently, including a betting app designed to boost viewer engagement.

Why should I care?

Zooming in: Why kill the goose that laid the golden egg?
Even without those plans, holding onto ESPN makes sense right now. See, traditional TV is a losing game these days, but ESPN’s cable offering was still beamed to about 75 million US homes last year – bringing in nearly $10 billion annually before you factor in ad deals. With cash like that, Disney has ample room to keep developing Disney+ – and little incentive to ditch ESPN.

The bigger picture: Disney’s kiss might turn this frog into a prince.
Loeb backed down after hearing the news, maybe because he realized Disney might just make good on its promises. After all, its total subscriber count has now overtaken Netflix’s, and its success looks set to continue: Disney delighted fans over the weekend by revealing its content slate, including trailers for sequels to its Avatar and Black Panther cash cows. And with the company set to maintain its $30 billion content budget and speedy production schedule, there’s likely plenty more where that came from.

Originally posted as part of the Finimize daily email.

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