Walt Disney Co. CEO Bob Iger remains bullish on retaining the rights to televise NBA games, telling investors that the company is confident that it will renew its longstanding deal with the league.
Speaking on Disney’s second quarter earnings call Tuesday morning, Iger made no bones about the importance of the NBA package to the linear TV networks ESPN and ABC and the emerging streaming platforms. “We continue to look at the NBA not only as a premium sports product, but as a sports product that has growth ahead of it, obviously with great demographics,” Iger said. “We feel really good about the potential package that we will end up with in terms of it, basically enabling ESPN to continue to shine in the television sports business.”
Iger went on to affirm that he would not address any particulars about Disney’s negotiations with the league, saying only that more details would be provided “if and when there is an announcement.”
Disney and the NBA have the scaffolding of a deal in place, one that would see ESPN reduce the number of regular-season games from 100 to about 80, with the cable channel expected to maintain its Wednesday night showcase while doing away with the Friday primetime slot. While no contracts have been signed, as part of the proposed $2.6 billion-per-year extension, ABC is a shoe-in to hold onto the exclusive rights to the NBA Finals, as well as one of the Conference Finals series.
The legacy deal expires at the conclusion of the 2024-25 NBA season.
While Iger did a bit of a shuffle step around an analyst’s query into the cost of continuing Disney’s relationship with the NBA, he said a renewal would be a boon for all parties concerned. “We’re confident, or optimistic, we’re going to end up with an NBA deal that will be long-term, and in our best interest and in the best interest of our subscribers,” Iger said.
Iger’s comments echoed the sentiments expressed by Disney chief financial officer Hugh Johnson, who earlier Tuesday morning told CNBC that he expects to “continue to have a good relationship with [the NBA] going into the future.” In that same interview, Johnson said the company would remain choosy about curating its portfolio of live sports rights, of which ESPN has about a 35% market share.
“I expect that we’re going to continue to choose to get the rights that we need to make ESPN a strong performer, where there are other things we may choose to either carve off a little piece of a sports right or we may give up certain things … that may be less relevant to the portfolio,” Johnson said during his appearance on the pre-market show Squawk Box.
Iger today also addressed ESPN’s future as a standalone basic-cable network. (Spoiler: He doesn’t see the TV business disappearing any time soon.) “I think ESPN is going to make a pivot toward digital, but without abandoning linear,” Iger said. “So it will remain on linear, if people want to get ESPN and its different channels through a cable or a satellite subscription, that’s fine. Or if they want to pivot smoothly—because there will be many different access points to get the digital product—to ESPN digital, they can do so as part of a bundle with other sports services, they can do so directly from ESPN with the ESPN app, or they can do it as part of a bundle with our own services.”
To that end, Disney will add an ESPN tile to its Disney+ menu by the end of the calendar year. The modification will allow users to stream “select live sports” and studio programming via Disney+. “We see this as a first step to bring ESPN to Disney+ viewers as we ready the launch of our enhanced standalone ESPN streaming in the fall of 2025,” Iger said.
Iger went on to say that the ESPN tile will serve to “condition Disney+ subscribers to the fact that sports is going to be there,” while also helping boost engagement on the platform, which closed out the quarter with 117.6 million global subscribers, a tally that includes 54 million subs in the U.S. and Canada.
Disney is also prepping the fall launch of a joint sports-streaming venture with Warner Bros. Discovery and Fox.
Domestic revenue for the ESPN unit was up 4% on the quarter to $3.87 billion, with operating income falling 9% to $780 million. Disney chalked up the loss to an increase in programming and production costs attributable to airing an additional College Football Playoff game and a decline in affiliate revenue.
ESPN+ ended the quarter with 24.8 million subs, down from 25.3 million in the year-ago period. All told, Disney’s DTC unit generated $6.19 billion in revenue, up 12% versus the January-to-March quarter in 2023. The streaming division reported a loss of $18 million on the period, marking a significant improvement compared to a year-ago loss of $659 million. If not for the sports DTC business losing $65 million, the company’s streaming business would have turned a small profit. (Disney expects the DTC unit to reach profitability in the fourth quarter of this year.)
Disney’s overall revenues grew 1% to $22.1 billion.
