ESPN Cannot Save Disney

By Douglas A. McIntyre Published Nov 2, 6:42AM EDT

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ESPN Cannot Save Disney — © Sean M. Haffey / Getty Images Sport via Getty Images

Reuters says cable sports channel ESPN is worth $24 billion. Suppose Walt Disney Co. (NYSE: DIS | DIS Price Prediction) sells a third to raise money and create a strategic partnership. It might get $8 billion. Disney is about to buy out Hulu joint owner Comcast for $8.6 billion, which values the streaming service at $28 billion. The transactions are part of a restructuring that will not save Disney from deeper problems.

Who Wants ESPN?

Reuters sees Disney selling a part of ESPN to Apple or Verizon. Apple already has a streaming service. However, it is based on entertainment. ESPN could supplement that. But Apple likes things it can control. A minority stake will not do that. Verizon and Apple must deal with the fact that ESPN is a damaged asset, although it is still highly profitable. Cable systems that used to prize it as a channel have prized it less recently. That triggers a decline in profits. (These are the most famous TV personalities in America.)

What About Hulu?

Buying Hulu is an odd decision. Disney is already in trouble with Disney+, its primary streaming service. Current CEO Bob Iger started it in November 2019, when he held the chief executive job for the first time. Iger priced the service below almost all its competitors. That caused it to lose billions of dollars as its subscriber base rocketed to 160 million. Iger has raised prices for the service, which may prompt millions of people to cancel. Disney also has to contend with the challenge to Hulu and Disney+ from Amazon and Netflix, which are older and well-established.

Out of Options?

In his hand of cards, Iger still has his theme parks, which are a cash machine. However, he also has floundering legacy media, which includes ABC. (Customers are abandoning these brands.)

Wall Street’s vote on Iger is that he has done his job poorly and continues to. The stock trades at the bottom of its 52-week range, even though raider Nelson Peltz wants a board seat to “improve value.” Iger thinks he can do that on his own. He cannot. Iger cannot save Disney.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.