ESPN’s profitability highlights the importance of the sports business for The Walt Disney Co.
In a recent SEC filing, The Walt Disney Co. revealed the revenue and profits generated by its sports division, ESPN. The filing showed that ESPN delivered $16 billion in revenue in fiscal 2022, with profits of $2.9 billion. This highlights just how lucrative the sports business is for Disney.
Previously, ESPN was included in Disney’s linear TV and streaming assets, but it will now have its own division led by Jimmy Pitaro. This move reflects Disney’s recognition of the significant role that ESPN plays in its overall business.
Comparatively, Disney’s new “entertainment” division, which includes its other TV networks, streaming services, film and TV studios, had revenues of $39.6 billion in fiscal 2022, but profits of only $2.1 billion. This can be attributed to the yet-to-be-profitable streaming business.
The profitability of ESPN emphasizes why Disney is keen to retain it. The company recently cut a deal with Charter Communications to end its blackout, indicating its determination to maintain ESPN’s success. The filing also revealed that most of ESPN’s revenues came from pay TV carriage fees, amounting to $10.1 billion, compared to advertising revenue of $4.4 billion.
While Disney has faced challenges due to cord-cutting, ESPN has been able to withstand the impact thanks to its lucrative carriage deals. The filing also highlighted that before Disney invested billions in streaming, its traditional entertainment business was highly profitable. However, the losses incurred by Disney+ affected the overall profitability.
Looking ahead, Disney is seeking partners to become minority shareholders in ESPN. Sports chief Jimmy Pitaro expressed the company’s desire to find partners who can enhance the flagship product as Disney plans to expand its streaming offering. Hearst, an early investor in ESPN, continues to own a 20 percent stake in the channel.
In conclusion, ESPN’s impressive revenue and profits demonstrate the significance of the sports business for The Walt Disney Co. The company’s decision to give ESPN its own division reflects its commitment to maintaining and enhancing its success. Despite challenges in the streaming industry, ESPN’s profitability remains strong, making it a valuable asset for Disney.
