ESPN is valued at about $30 billion, with the National Football League’s 10 percent equity stake in the sports media giant securing an estimated fair market value of $3 billion, according to The Walt Disney Co.’s latest quarterly earnings report.
Disney and the NFL closed their mega deal in the last week, giving the league its non-controlling interest, leaving Disney with 72 percent, and Hearst with 18 percent. According to the company’s 10-Q, Disney will have an option to reacquire the NFL’s stake in ESPN after July 2034, based on the division’s performance, in exchange for a ten-year note at 70 percent of the then fair market value of the NFL’s interest in ESPN. The league, meanwhile, has an option to acquire an additional 4 percent of ESPN on a similar timetable, also at 70 percent market value.
The deal will see ESPN fully own NFL Network, with plans to bake it into the ESPN streaming service. The RedZone channel, meanwhile, will join Disney’s linear portfolio, with Disney also planning to merge its ESPN fantasy football product with NFL Media’s fantasy product. The NFL will also license games, RedZone, NFL Films programming and other content and rights to ESPN, with the sports media company also securing rights to the RedZone brand to use for other sports.
Perhaps most importantly, Disney will be getting the exclusive games that had lived with NFL Network, giving it more inventory.
Disney is expected to integrate the NFL’s media assets in the coming weeks and months.
“We’re really happy that we were able to close it when we did, that enables us to get started sooner than we actually had anticipated,” Disney CEO Bob Iger told Wall Street analysts Monday. “So the upcoming NFL season, which will end in ESPN first Super Bowl is a huge opportunity for ESPN, not only in terms of its ability to manage the NFL Network and RedZone, but also with more NFL inventory. And we know how valuable that is, and how valuable it will be, particularly for ESPN streaming business.”
The quarter also revealed just how vulnerable ESPN remains to the pay-TV ecosystem. All of Disney’s channels, including ESPN, were dark for weeks on YouTube TV last quarter, the company’s longest blackout in its history. The company disclosed a $110 million hit to operating income due to the blackout, underscoring how reliant ESPN remains to the ecosystem, even after launching its standalone streaming platform last year.
Per Disney’s fiscal Q1 earnings report, the sports division (which is almost entirely comprised of ESPN) had revenue of $4.9 billion and operating income of $191 million.
