Disney Reports ESPN Profits Plummet by 20%
Struggling sports giant ESPN, owned by Disney, has witnessed a significant 20% profit decline in the first nine months of the fiscal year, revealing the impact of cable subscribers cutting the cord. The usually private financials of ESPN were disclosed as Disney actively seeks a strategic investor for what was long considered its crown jewel.
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According to a recent SEC filing, Disney disclosed that its sports segment, encompassing ESPN, ESPN-related channels, streaming service ESPN+, and sports channel Star India, experienced a 20% profit plunge to $1.48 billion in the initial three quarters of fiscal 2023. Sales also declined by 1.3% to $13.2 billion.
In the third quarter of this year, the sports unit reported a profit of $854 million on sales of $4.3 billion. More than half of this revenue, $2.6 billion, was derived from cable and satellite TV subscribers, while roughly $1.15 billion came from advertising.
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Amid challenges such as cord-cutting and escalating sports rights fees, Disney CEO Bob Iger has openly acknowledged the struggles facing its cable business. In a bid to address these challenges, Disney plans to offer its ESPN cable network as a streaming service for cord-cutters and is exploring distribution partnerships, having engaged in talks with Verizon and T-Mobile.
While the exact value of the sports division is yet to be determined, one Bloomberg analyst estimated its worth at up to $22 billion for potential partners. Disney’s move to seek a strategic investor for ESPN reflects the changing landscape of media consumption and the company’s efforts to adapt to evolving consumer preferences.
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