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"Earlier this fall, Liberty Media chairman and longtime media-industry titan John Malone also said that Disney could explore a sale of ESPN

Between the rising content costs and the defection of consumers, some analysts have proposed that Disney spin off its ESPN unit.


https://www.washingtonpost.com/news/the-...67e29e0922
Doesn't ESPN generate the bulk of Disney revenue?
ESPN still makes boatloads of cash. The price would have to be pretty high for Disney to actually sell.
I had mentioned this before in relation to conferences that have signed deals with ESPN that run out 15 to 20 years and the risk in doing so

most people replied that "Disney is not going to give up the cash cow of ESPN" or something similar....but yet here we are already seeing discussions of it

this is how big, relativity diverse, companies that want to stay relevant work they ditch assets before they go to zero instead of becoming time warner or something similar

the risk is if that company goes to BK your contract with them does not get torn up especially if it is seen as an asset with any value....often times you get treated like a debtor and the company keeps your contract and you are paid some percentage of the former value of it similar to what an unsecured debtor would get

the other risk is even if they do not go into full BK if traditional cable pretty much goes away or dies a long term slow death who knows what type of carriage ESPN and any of their networks will have 15 years down the road and who knows what the burden of debt and or little to no profits will do to their ability to enter into a new type of content delivery

like many companies that get spun off from a much larger parent especially when they are seen as a risk or in transition they are going to get stuck with a lot of overhead and who knows if they will ditch that overhead and make the move fast enough or if they will have enough money and more importantly enough power to make that transition happen

on their own and alone who knows what they will be winning to chop off immediately and what leverage they will have to push streaming or what value they can get from that streaming especially as other content they have that people value moves elsewhere or as people (subs and carriers) simply see that the content they have is not really valued all that much or has no value to them

it is like MTV only many years sooner than what MTV is now.....if MTV was off on their own right now with the crap they put on their channel would they even be able to get 200 streaming subscribers at a $.10 a month.....possibly if it was actually $.10 a month with 4 months free and probably 100 of those subscribers would drop it in 3 years when they hit 19 or 20 and there would be no one coming in behind them to pick up as more subscribers

25 years ago MTV when they played music still and some of their content was new and different would have done OK as a stream if that was an option.....and without the largess of being able to just cram themselves on every cable MSO would possibly not have set in and who knows what they would be today

but that is what ESPN is facing right now the nonchalance and the massive overhead of fools and the turn towards commentary from people with the IQ of a pea has set in and is already rotting them and swamp buggy racing and strongest man have already found new homes

if they get set off on their own especially within the next couple of years and they do not have the Disney pull of withholding a massive number of channels across many subscriber bases the cable MSOs will crap on them left and right

Disney has a choice to make right now do they try and go through one more round of cramming channels on cable MSOs and hope that they can pull it off and then set ESPN afloat with that last round of cramming supporting them or do they run the risk of the cable MSOs saying "no" in the next few years and then ESPN and the ESPN brand is devalued pretty much over night while Disney still owns it

or do they try some sort of tracking stock or partial ownership and another round of cramming before cutting ties completely

either way not a ship I would want to be tied to for the next 20 years
Absolutely crazy that a company as profitable as ESPN would be up for sell. I don't think it will actually happen. Who could buy it and get past the feds for anti trust, so no Turner, CBS, FOX, or Comcast
(12-10-2016 10:32 AM)Niner National Wrote: [ -> ]Doesn't ESPN generate the bulk of Disney revenue?

I think they get a lot of money from the MCU.
Every company in the broadcasting business is for sale, no matter what anyone says. Every company has their price.
(12-10-2016 10:44 AM)solohawks Wrote: [ -> ]Absolutely crazy that a company as profitable as ESPN would be up for sell. I don't think it will actually happen. Who could buy it and get past the feds for anti trust, so no Turner, CBS, FOX, or Comcast

Need to sell while they still can, before the liabilities become bigger than the revenue. Subs are still being lost at concerning clip.
(12-10-2016 10:44 AM)solohawks Wrote: [ -> ]Absolutely crazy that a company as profitable as ESPN would be up for sell. I don't think it will actually happen. Who could buy it and get past the feds for anti trust, so no Turner, CBS, FOX, or Comcast

I actually think Time Warner (Turner) could get away with it simply because Turner doesn't have a very big sports portfolio. Turner could shutdown ESPNEWS and move the live programming over to TruTV. Of course if Time Warner is sold to AT&T then this is probably off the table.

ESPN on ABC is technically paid programming; I'm sure ABC is selling that airtime pretty much at cost to ESPN since they are related parties, but Disney could make a substantial amount of money on the sale of ESPN if the new owner is obligated to buy airtime on ABC to fulfill existing contracts.

The other possibility is that Hearst buys out the remaining 80% of ESPN from Disney. Hearst may have better vertical integration within its media empire to turn around ESPN.


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(12-10-2016 10:52 AM)jaredf29 Wrote: [ -> ]
(12-10-2016 10:32 AM)Niner National Wrote: [ -> ]Doesn't ESPN generate the bulk of Disney revenue?

I think they get a lot of money from the MCU.

Disney's cash cow is the theme park division. Everything else they do is designed to get people to Orlando and Anaheim (or Paris, Hong Kong, etc) where they are basically printing money.
(12-10-2016 11:06 AM)chargeradio Wrote: [ -> ]
(12-10-2016 10:44 AM)solohawks Wrote: [ -> ]Absolutely crazy that a company as profitable as ESPN would be up for sell. I don't think it will actually happen. Who could buy it and get past the feds for anti trust, so no Turner, CBS, FOX, or Comcast

I actually think Time Warner (Turner) could get away with it simply because Turner doesn't have a very big sports portfolio. Turner could shutdown ESPNEWS and move the live programming over to TruTV. Of course if Time Warner is sold to AT&T then this is probably off the table.

ESPN on ABC is technically paid programming; I'm sure ABC is selling that airtime pretty much at cost to ESPN since they are related parties, but Disney could make a substantial amount of money on the sale of ESPN if the new owner is obligated to buy airtime on ABC to fulfill existing contracts.

The other possibility is that Hearst buys out the remaining 80% of ESPN from Disney. Hearst may have better vertical integration within its media empire to turn around ESPN.


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The feds always take a very wide view of "industry" when they consider if a monopoly will exist after a merger.

The "industry" in this case will be "television," or maybe even "media." So a company's sports portfolio will be irrelevant.
(12-10-2016 11:10 AM)AppfanInCAAland Wrote: [ -> ]
(12-10-2016 10:52 AM)jaredf29 Wrote: [ -> ]
(12-10-2016 10:32 AM)Niner National Wrote: [ -> ]Doesn't ESPN generate the bulk of Disney revenue?

I think they get a lot of money from the MCU.

Disney's cash cow is the theme park division. Everything else they do is designed to get people to Orlando and Anaheim (or Paris, Hong Kong, etc) where they are basically printing money.

https://www.washingtonpost.com/news/the-...116a7ef61e

ESPN is first at 24 billion
Theme parks are 2nd at 17 billion
Maybe I'm wrong. The future of sports on TV could very well be specialized networks, outside of big events that get placed on network TV.

ESPN is such a profitable powerhouse though it's hard seeing American sports without them.
(12-10-2016 11:19 AM)solohawks Wrote: [ -> ]
(12-10-2016 11:10 AM)AppfanInCAAland Wrote: [ -> ]
(12-10-2016 10:52 AM)jaredf29 Wrote: [ -> ]
(12-10-2016 10:32 AM)Niner National Wrote: [ -> ]Doesn't ESPN generate the bulk of Disney revenue?

I think they get a lot of money from the MCU.

Disney's cash cow is the theme park division. Everything else they do is designed to get people to Orlando and Anaheim (or Paris, Hong Kong, etc) where they are basically printing money.

https://www.washingtonpost.com/news/the-...116a7ef61e

ESPN is first at 24 billion
Theme parks are 2nd at 17 billion

I stand corrected.

Though the article did imply ESPN doesn't fit with the parks like other division.
(12-10-2016 11:23 AM)solohawks Wrote: [ -> ]Maybe I'm wrong. The future of sports on TV could very well be specialized networks, outside of big events that get placed on network TV.
In some ways I expected this trend to already start happening. The NFL Network could have brought Monday Night Football in house to go along with Thursday Night Football. The MLB Network pulls in one of Fox, ESPN, or Turner's packages. Obviously you could keep going until only the "local" rights and the postseason rights get sold to others, and you have six to eight specialized sports channels in the typical bundle. The archived programming gets shoved to off-season times or to on-demand libraries.

High-inventory events like the NCAA Tournament get sold to broadcast TV or general-interest cable networks.


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(12-10-2016 11:19 AM)solohawks Wrote: [ -> ]https://www.washingtonpost.com/news/the-...116a7ef61e

ESPN is first at 24 billion
Theme parks are 2nd at 17 billion

Which shows that almost no one can afford to pay what ESPN is worth. Disney's total annual revenue is about $52 billion; ESPN is almost half of that.

Disney's market cap (as of today) is about $167 billion, ESPN is a bit more than 46% of that, which would value ESPN at about $77 billion as a standalone company.

Who has $77 billion to buy ESPN? Not any media companies. The entire value of 21st Century Fox, Inc., for example, is only $51 billion. Which means the ESPN haters fantasizing about Disney "dumping" ESPN are left to dream about something out of left field like Apple or Amazon or Facebook buying ESPN. (You think you hate ESPN now? How much more detestable would it be if the Facebook a--holes were running it?)
(12-10-2016 11:19 AM)solohawks Wrote: [ -> ]
(12-10-2016 11:10 AM)AppfanInCAAland Wrote: [ -> ]
(12-10-2016 10:52 AM)jaredf29 Wrote: [ -> ]
(12-10-2016 10:32 AM)Niner National Wrote: [ -> ]Doesn't ESPN generate the bulk of Disney revenue?

I think they get a lot of money from the MCU.

Disney's cash cow is the theme park division. Everything else they do is designed to get people to Orlando and Anaheim (or Paris, Hong Kong, etc) where they are basically printing money.

https://www.washingtonpost.com/news/the-...116a7ef61e

ESPN is first at 24 billion
Theme parks are 2nd at 17 billion

but you are looking at "revenues" while investors and CEOs and CFOs look at "profits"

this is similar to many sports fans especially college sports that talk about "all the money that college sports teams "MAKE"" while again not understanding that the VAST majority of college sports teams MAKE ZERO they LOSE a ton of money because they spend a great deal more money to give athletes top flight coaches and training facilities and venues to perform in than they actually take in for revenues much less the food, housing, health care and education that so many athletes place ZERO value on

this is from the link you provided

https://ditm-twdc-us.storage.googleapis....rnings.pdf


Media Networks
Media Networks revenues for the quarter decreased 3% to $5.7 billion, and segment operating income decreased 8% to $1.7 billion. The following table provides further detail of the Media Networks results

Cable Networks
Operating income at Cable Networks decreased $207 million to $1.4 billion for the quarter due to decreases at ESPN and the Disney Channels, partially offset by an increase at Freeform.

Broadcasting
Operating income at Broadcasting increased $60 million to $224 million for the quarter due to higher operating income from program sales, an increase in affiliate revenue and a decrease in compensation-4 related costs, partially offset by higher programming costs, lower advertising revenue and an increase in equity losses from Hulu

Parks and Resorts
Parks and Resorts revenues for the quarter increased 1% to $4.4 billion, and segment operating income decreased 5% to $699 million due to a decrease at our international operations, partially offset by an increase at our domestic operations.


Studio Entertainment
Studio Entertainment revenues for the quarter increased 2% to $1.8 billion, and segment operating income decreased $149 million to $381 million. The decrease in operating income was driven by lower theatrical distribution results, partially offset by growth in TV/SVOD distribution.


Consumer Products & Interactive Media
Consumer Products & Interactive Media revenues for the quarter decreased 17% to $1.3 billion, and segment operating income decreased 5% to $424 million. The decrease in revenue was primarily due to the discontinuation of our Infinity console game business. Lower operating income was driven by decreases at our merchandise licensing and games businesses, partially offset by an increase at our publishing business due to cost saving initiatives.



so we have Operating Income is a synonym for earnings before interest and taxes (EBIT) and is also referred to as "operating profit" or "recurring profit." Operating income is calculated as: Operating income = gross income - operating expenses - depreciation - amortization.

so "Media Networks" operating income for the quarter was down 8% to $1.7 billion

"Parks and Rec" down 5% to $699 million

"Studio Entertainment" down $149 million to $381 million

and "Consumer Products $ Interactive Media" down 5% to $424 million

but the important part as it relates to ESPN is this

"Cable Networks" operating income down $207 million to $1.4 billion

"Broadcasting" operating income UP $60 million to $224 million

so cable operating income was down 12.88% in a single quarter while broadcast was up 36.58%

and the "Cable Networks" includes the Disney lineup as well

so while ESPN brings in a large chunk of revenues their operating income is declining rapidly at a time that broadcast is actually up and with the exception of "Studio entertainment" the "Cable Networks" had the largest decrease in operating income and at least "Studio entertainment" had an increase in total revenues

it is much easier to turn around a profit/loss with an increase on total income than it is to turn that around while also facing declining total income which is what the "Cable Networks" are facing

and while the "Consumer Products and Interactive Media" also had a large decrease in total revenues (the only one besides "Cable Networks") that was in part to a one time action of ditching a failed gaming console while the "Cable Networks" are facing continued and rapidly increasing subscriber decreases

so even the "Broadcast" portion of the equation had an increase on total revenue and they were the only one with an increase in operating income and all the other segments with the exception of one at least had an increase on operating revenues even with a decrease in operating income and the one with the decrease in revenues had a one time event on there

and again the "Cable Networks" includes other channels besides ESPN

so while ESPN is still responsible for a large amount of revenues and a large amount of profits they are combined with other Disney cable channels and they are the one that is facing dramatic total revenue declines that only look to increase and they ones that are facing extremely large operating income declines

and again it is very difficult to "turn it around" when you are looking at both large decreases in total revenues and operating income Vs at least increasing revenues while having operating income decreases

it is clear that ESPN needs to get ahead of their revenue declines at a much faster rate because the 12.88% operating income decrease for "Cable Networks" is much larger than the 3% decrease in "Media Networks" total revenues and that was with "Broadcast" having a 36.58% increase in operating income
(12-10-2016 11:48 AM)Wedge Wrote: [ -> ]
(12-10-2016 11:19 AM)solohawks Wrote: [ -> ]https://www.washingtonpost.com/news/the-...116a7ef61e

ESPN is first at 24 billion
Theme parks are 2nd at 17 billion

Which shows that almost no one can afford to pay what ESPN is worth. Disney's total annual revenue is about $52 billion; ESPN is almost half of that.

Disney's market cap (as of today) is about $167 billion, ESPN is a bit more than 46% of that, which would value ESPN at about $77 billion as a standalone company.

Who has $77 billion to buy ESPN? Not any media companies. The entire value of 21st Century Fox, Inc., for example, is only $51 billion. Which means the ESPN haters fantasizing about Disney "dumping" ESPN are left to dream about something out of left field like Apple or Amazon or Facebook buying ESPN. (You think you hate ESPN now? How much more detestable would it be if the Facebook a--holes were running it?)

once again this is incorrect that is not "ESPN" that is ALL networks including ABC and all Disney Networks

as the financials show in the link on that page ESPN is not the sole provider of the total revenue or the operating income of the Disney Networks Division

also Disney owns 50% of Lifetime, History and A&E and I am not sure where they reflect their earnings for those, but with a sale of ESPN they could possibly pull in the other half of those (which have also been losing subs, but not as fast as ESPN) and go away from sports all together with the exception of some on ABC

so again all but the broadcast portion of Disney networks are hurting, but ESPN is the anchor dragging them right now and it does not appear it is going to get better for ESPN specifically
(12-10-2016 10:37 AM)Pervis_Griffith Wrote: [ -> ]ESPN still makes boatloads of cash. The price would have to be pretty high for Disney to actually sell.

I think that is what the analysts are pushing. Sell high.
(12-10-2016 12:27 PM)TodgeRodge Wrote: [ -> ]also Disney owns 50% of Lifetime, History and A&E and I am not sure where they reflect their earnings for those, but with a sale of ESPN they could possibly pull in the other half of those (which have also been losing subs, but not as fast as ESPN) and go away from sports all together with the exception of some on ABC

Which would raise an interesting question — in this timeline where ESPN is spun off or sold, would ABC maintain a relationship with ESPN to provide sports coverage/branding, or does ABC Sports have to build from a tabula rasa? Or do they just wash their hands of sports entirely?
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