Well, that would certainly disrupt this forum.

https://variety.com/2022/tv/news/disney-...235341464/

There have been people in the financial industry calling on Disney to Sell ESPN for years now.

My Spidey-sense always goes up when I see an "activist investor" sending a letter since it's virtually always about getting some pumped up short-term gain to the stock price (invariably held in large quantities by that activist investor) via cost-cutting and restructuring as opposed to strategic long-term growth and investment.

A lot of the comments from Loeb (in the OP article) fit with the framework with respect to cost-cutting and not restoring the company dividend, which is all par for the course for an activist investor.

That being said, the suggestion for Disney to spin-off ESPN *but* maintaining a strong contractual relationship between the two is at least a little more interesting than some of the calls to just "Sell ESPN!" for the sake of selling it. The focus from Loeb seemed to be that ESPN couldn't maximize some of its value in relationships with the growing sports betting industry that runs counter to the Disney image. He actually seems to understand that the reason why Disney is holding onto ESPN is that it is still *very* profitable (contrary to what a lot of fans that just see cord cutting numbers believe), so there needs to be some other reason for Disney to spin-off ESPN besides simply cord cutting when it continues to be such an incredibly profitable business.

(08-15-2022 11:55 AM)DFW HOYA Wrote:  Well, that would certainly disrupt this forum.

https://variety.com/2022/tv/news/disney-...235341464/

There have been several rumours and statements online regarding Disney divesting/selling/spinning off either ESPN, HULU, or both.

I dunno. ESPN money still seems good right now, and from most sources it seems that espn money financed the marvel, lucasfilm, and 20th studios purchases. And 20% of ESPN is owned by Hearst.

Hulu's a mixed bag - over 40M subs, and has a second type of sub for channels. But Comcast/NBCU owns about a third. buyout would apparently be around $10B.

I also think there's an issue (a lesser issue to-be-sure) that espn ate abc sports.

Personally, I think if they get rid of either, hulu seems the least necessary to what seems to be the disney distribution and financial models.

I think the only reason to keep hulu at this point, would be to merge it into Disney plus. And that can't/won't happen til comcast is bought out. So do you spend around 10B, or do you sell it to get around 20B or more? I think the latter. And use the money for development, aquisitions, and pay down debt.

But if Disney decides to get rid of espn, they could just make sure they retain the pre-2006 "abc sports" property, distribution, ip, indicia, etc., rights.

Getting rid of espn would shield disney from the cable and streaming downturns some. as well as the new markets involving sports betting.

And finally, getting rid of either espn, hulu, or both, helps disney likely be more able to target new acquisitions, if they don't look quite so big to the FCC...

All that said, I don't expect any movement on this any time soon. YMMV, of course : )

(08-15-2022 12:21 PM)Frank the Tank Wrote:  My Spidey-sense always goes up when I see an "activist investor" sending a letter since it's virtually always about getting some pumped up short-term gain to the stock price (invariably held in large quantities by that activist investor) via cost-cutting and restructuring as opposed to strategic long-term growth and investment.

A lot of the comments from Loeb (in the OP article) fit with the framework with respect to cost-cutting and not restoring the company dividend, which is all par for the course for an activist investor.

That being said, the suggestion for Disney to spin-off ESPN *but* maintaining a strong contractual relationship between the two is at least a little more interesting than some of the calls to just "Sell ESPN!" for the sake of selling it. The focus from Loeb seemed to be that ESPN couldn't maximize some of its value in relationships with the growing sports betting industry that runs counter to the Disney image. He actually seems to understand that the reason why Disney is holding onto ESPN is that it is still *very* profitable (contrary to what a lot of fans that just see cord cutting numbers believe), so there needs to be some other reason for Disney to spin-off ESPN besides simply cord cutting when it continues to be such an incredibly profitable business.

Yes, though usually, if you are planning on selling something, you try to do that at peak profitability, and hopefully not when it's on a downward move.

That said, I don't think we've seen a cash cow Disney was afraid to milk : )

ESPN is the only Disney asset producing new content. The rest is regurgitation of a large catalog.

Frank the Tank - You hit one my first reaction. It sounded like an Elliott-style activist tactic. Quick short-term profit.

Honestly as the streaming world is settling into a pattern very similar in dynamics to OTA broadcasting, the value of sports content (and to a lesser degree news) is going to have stronger leverage moving forward. There may not be the subscriber cash grab of year past. But those who vaue sports are more willing to pony up these days.

(08-15-2022 12:21 PM)Frank the Tank Wrote:  My Spidey-sense always goes up when I see an "activist investor" sending a letter since it's virtually always about getting some pumped up short-term gain to the stock price (invariably held in large quantities by that activist investor) via cost-cutting and restructuring as opposed to strategic long-term growth and investment.

A lot of the comments from Loeb (in the OP article) fit with the framework with respect to cost-cutting and not restoring the company dividend, which is all par for the course for an activist investor.

That being said, the suggestion for Disney to spin-off ESPN *but* maintaining a strong contractual relationship between the two is at least a little more interesting than some of the calls to just "Sell ESPN!" for the sake of selling it. The focus from Loeb seemed to be that ESPN couldn't maximize some of its value in relationships with the growing sports betting industry that runs counter to the Disney image. He actually seems to understand that the reason why Disney is holding onto ESPN is that it is still *very* profitable (contrary to what a lot of fans that just see cord cutting numbers believe), so there needs to be some other reason for Disney to spin-off ESPN besides simply cord cutting when it continues to be such an incredibly profitable business.

From the article, it sounds like he wants Disney to split off ESPN so that ESPN can go full-tilt on gambling, which the House of Mouse has PR scruples about. He's not saying "find a buyer for ESPN", he's saying split off ESPN from Disney.

If you split Disney shares into Disney shares and ESPN shares, with Disney contracted to provide however many ABC timeslots and ESPN+ back-end services and whatever else, then ESPN can go whole-hog on sports betting without getting Cinderella's dress all muddy.

That ESPN might also be in a position to buy WWE, another profitable but disreputable business that makes sense in some ways for Disney but not in others.

(08-15-2022 12:26 PM)Claw Wrote:  ESPN is the only Disney asset producing new content. The rest is regurgitation of a large catalog.

Thats not actually true. Lots of new content development going on at Disney Studios and within ABC. Your right---ESPN produces a ton of new content---and that ESPN content has substantial added value because its largely consumed "live" in real time----which means its audience is viewing the commercials as well as the content (no fast forwarding). On the other hand, a Disney movie or TV series can continue to attract viewers for decades after they have been produced----where as ESPN game content is virtually worthless in terms of attracting viewers once the final score is determined. So--Disney/ABC produced content has a much longer productive economic life than ESPN sports content. Disney/ABC content becomes part of a Disney content library that has long term earning value as an "on demand" commodity. In contrast---ESPN must continue buying enough new content to fill its schedule or it will cease to have viewers. Its old content is virtually worthless--and cannot really be monetized to generate a residual long term revenue stream.

Does DraftKings have enough money to buy ESPN?

(08-15-2022 12:48 PM)ArmoredUpKnight Wrote:  Does DraftKings have enough money to buy ESPN?

It would be the other way around with ESPN buying DraftKings (or having some other type of gaming relationship) in the type of spin-off deal that the activist investor in the OP article is advocating here.

Figures generally have ESPN's value at around $40-50 billion.

DraftKing's market cap as of today is a little over $8 billion.

Hulu could go back to showing free stuff since they have Disney +. CBS/Viacom now owns Pluto TV, and it is mainly free service, but CBS Access is is paid. Fox owns Tubi TV which is free.

I guess stuff like this wasn't enough proof for Third Point that Disney seems to have no issue with betting.

https://www.forbes.com/sites/willyakowic...cddd62275d

https://www.ft.com/content/c6b81bfa-a654...720a2f551c (worked the first time, put up a paywall when I clicked the link a second time)

https://www.casino.org/news/chapek-ackno...ing-plans/

ESPN made perfect sense for Disney back when sports on network TV was a large part of the TV landscape. There were a lot of synergies between ABC Sports broadcasts and ESPN broadcasts. Today, those synergies are largely non-existent.

Today, there's two relatively new synergies: the ESPN Wide World of Sports complex at Disney World, and the streaming bundle with ESPN+, Hulu+, and Disney+. Although I have no idea how big those synergies are.

(08-15-2022 12:58 PM)Alanda Wrote:  I guess stuff like this wasn't enough proof for Third Point that Disney seems to have no issue with betting.

https://www.forbes.com/sites/willyakowic...cddd62275d

https://www.ft.com/content/c6b81bfa-a654...720a2f551c (worked the first time, put up a paywall when I clicked the link a second time)

https://www.casino.org/news/chapek-ackno...ing-plans/

ahhh "Bread and Circuses" : )

I'm not really sure ESPN /Disney should be involved in any type of Sports gambling, especially now that NIL is involved with players. Seems it could eventually lead to games being thrown as well as networks could have advanced inside information the public that gamblers wouldn't have. I might be wrong but it isn't impossible to fantom.

(08-15-2022 01:02 PM)Captain Bearcat Wrote:  ESPN made perfect sense for Disney back when sports on network TV was a large part of the TV landscape. There were a lot of synergies between ABC Sports broadcasts and ESPN broadcasts. Today, those synergies are largely non-existent.

Today, there's two relatively new synergies: the ESPN Wide World of Sports complex at Disney World, and the streaming bundle with ESPN+, Hulu+, and Disney+. Although I have no idea how big those synergies are.

If espn is spun off, I wonder if abc would regain/retain the "wide world of sports" branding, yellow jackets and all.

(08-15-2022 12:56 PM)DavidSt Wrote:  Hulu could go back to showing free stuff since they have Disney +. CBS/Viacom now owns Pluto TV, and it is mainly free service, but CBS Access is is paid. Fox owns Tubi TV which is free.

Hulu has Disney's live streaming service, plus serves as an outlet for all of the Fox stuff they acquired like American Horror Story, Prey, It's Always Sunny, and the various R rated movies that don't really fit a Disney branded product. I don't think they can really merge it into Disney+ without backlash from parents groups and at least a moderate ding to the Disney brand's family friendly reputation.

(08-15-2022 01:05 PM)Skyhawk Wrote:  

(08-15-2022 01:02 PM)Captain Bearcat Wrote:  ESPN made perfect sense for Disney back when sports on network TV was a large part of the TV landscape. There were a lot of synergies between ABC Sports broadcasts and ESPN broadcasts. Today, those synergies are largely non-existent.

Today, there's two relatively new synergies: the ESPN Wide World of Sports complex at Disney World, and the streaming bundle with ESPN+, Hulu+, and Disney+. Although I have no idea how big those synergies are.

If espn is spun off, I wonder if abc would regain/retain the "wide world of sports" branding, yellow jackets and all.

If there's a corporate breakup, I think ABC makes more sense under the ESPN umbrella than under the Disney umbrella. If Disney can license the Simpsons back to Fox, they can license The Conners and Abbott Elementary and whatever else to ABC.

Disney worried about their image

“Loeb acknowledged some of these issues, but urged Disney to move forward. “ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting.”