For all you read about how great Walt Disney CEO Bob Iger may be, the stock has gone nowhere in 5 years. It was at $101/share at the start of May 1998. It’s $102 now.
Iger got thrown into the culture wars by Florida Republicans, and while many are applauding his strategy, he wants to get out soon and needs a big win.
Selling ESPN will be a big win.
What stock analysts will tell you is that cable is dying, and ESPN is more dependent on it than anyone. It now collects $9/month from everyone’s basic cable bill whether they watch its channels or not. That’s a big reason many are canceling cable.
But there are two bigger problems looming over the company.
The first is the cost of broadcasting rights. That’s rising fast, and ESPN is losing rights auctions. It now dominates only hockey and college football. It has one-fourth of the NFL, one-half of the NBA, one-third of baseball. It has lost cricket and soccer, two huge global games. Its ESPN+ streaming service is now the home of leftovers and depends on (often crappy) local broadcasters for its feeds.
This is going to get worse because of the second problem.
Sports betting.
ESPN has a deal with DraftKings, but it compromises the company’s core values. Gambling’s control over sports is rising, and scandals are breaking out all over. This isn’t going to change. Gambling is where sports’ growth is. Las Vegas will soon have teams in every major sport.
For gamblers, ESPN is prime real estate. Sell it to them.
This may prove difficult as ESPN is said to be worth $50 billion. But it’s far from impossible. Flutter Entertainment, which is Europe’s biggest sports gambling player, is worth $35 billion. Las Vegas Sands is worth $48 billion. You can buy DraftKings, now worth $10 billion, and spin the resulting company out, then sell your interest in it over time.
Sports gambling is growing like a weed, thanks to the Supreme Court letting all states offer it. Gambling is where the growth is for sports and Disney is not about gambling. It needs to profit from the trend before getting sucked into it.
