As the competition for sports streaming rights escalates, with YouTube, Netflix and Amazon challenging traditional media companies for game packages, Disney has found an innovative way to strengthen its grip on football.
The Walt Disney Company, which owns ESPN, and the National Football League announced a deal on Tuesday night for the N.F.L. to take a 10 percent equity stake in ESPN. In exchange, ESPN will acquire the league’s traditional NFL Network and certain rights to the fan-favorite RedZone Channel, among other media assets.
“This is a gigantic leap forward for ESPN as it gets ready to launch its service,” Robert A. Iger, Disney’s chief executive, said in an interview.
ESPN’s new streaming service will arrive on Aug. 21 and cost $30 a month. It will include all ESPN programming, including live events — some 47,000 a year. For the first time, ESPN viewers will not need a cable or satellite subscription. The service will also offer enhanced stats, betting, short-form video, personalized “SportsCenter” coverage and shopping, among other features.
The NFL Network will be “seamlessly integrated” into the app, Mr. Iger said. Roger Goodell, the N.F.L. commissioner, and Mr. Iger also announced a second deal on Tuesday that will bring three additional N.F.L. games per season to ESPN platforms, along with a wider array of N.F.L. specialty content.
“Our fans are the ones who are going to benefit from this,” Mr. Goodell said. “They’ll get deeper, richer, more exciting content.”
Under a prior deal, Disney pays the N.F.L. around $2.7 billion per year for “Monday Night Football,” which airs on ESPN and ABC, the Disney-owned broadcast network. The agreement, which includes the 2027 and 2031 Super Bowls, runs through 2033 but can be reopened in 2029.
The N.F.L.’s stake in ESPN would presumably give the channel (and service) a leg up in future negotiations with the league for media rights. YouTube, Amazon, NBC, CBS, Fox and Netflix also hold various N.F.L. rights. No other sport comes close to the N.F.L. in terms of viewership, making its games highly sought after.
ESPN was Disney’s financial engine for nearly 30 years, powering the company through recessions, box-office wipeouts and the pandemic. In 2023, however, Mr. Iger and Jimmy Pitaro, ESPN’s chairman, started to explore a once-unthinkable sale of a stake in the division as a way to confront the turbulent economics of the streaming era.
In 2013, roughly 100 million households received ESPN. Today, as a result of cord cutting, that number is closer to 61 million. ESPN has raised its affiliate fees to maintain profitability, but its ability to continue doing so will be limited in the coming years: By 2027, fewer than 50 million homes will pay for a cable hookup, according to PwC, the accounting giant.
On Wednesday, Disney reported $3.9 billion in quarterly domestic revenue for ESPN, a 1 percent increase from a year earlier. Operating profit fell 7 percent, to $1 billion, primarily because of higher programming and sports rights costs.
Companywide, adjusted per-share income increased 16 percent from a year earlier, to $1.61, which was well above analyst expectations. Revenue totaled $23.7 billion, up 2 percent, on a par with expectations.
The quarter was surprisingly strong for Disney theme parks. Operating profit at Disney’s domestic resorts soared 22 percent, to $1.7 billion. Revenue climbed 10 percent, to $6.4 billion. Results were especially robust at Walt Disney World, which shrugged off increased competition from a new Universal park nearby in Florida.
Disney increased its forecast for annual growth as a result of its quarterly performance. It is now expecting adjusted per-share income of $5.85, an 18 percent increase from last year. The company also said it expected its Disney+ and Hulu streaming services to add a combined 10 million subscriptions in the current quarter. (For the three months that ended in June, the two services had 183 million subscriptions, up 2.6 million from the winter quarter.)
The no-cash deal between ESPN and the N.F.L. was valued by analysts at $2 billion to $3 billion. It is subject to regulatory approval, which could take roughly a year. If it is completed, Disney will own 72 percent of ESPN, down from 80 percent. Hearst’s stake, which it has held since 1990, will drop to 18 percent from 20 percent.
The N.F.L. will continue to own and operate the NFL+ streaming service, NFL Films and the NFL Podcast Network, among other media properties. It will also continue to own, operate and produce NFL RedZone, a live channel that shows every touchdown scored during Sunday afternoon games.
As for parting with the NFL Network, which was started in 2003, Mr. Goodell said he was glad to put it “in the hands of a partner who is excited about growing not just the distribution but also the quality.” The NFL Network is distributed to about 44 million homes, down from about 70 million a decade ago.
Disney has been talking to the N.F.L. about taking a stake in ESPN since 2023.
“The selling of assets, particularly assets as valuable as ESPN, takes time and requires a lot of thought,” Mr. Iger said. “It’s not ‘snap your fingers, here’s 10 percent of ESPN and we get the NFL Network.’”
“As we analyzed it, it became more and more clear that a deal with the N.F.L. would not only be accretive economically to Disney, but it would deliver the kind of strategic value that we were seeking,” Mr. Iger added. “We think that it will go a long way toward improving ESPN’s prospects when it migrates more and more into a direct-to-consumer product.”
Brooks Barnes covers all things Hollywood. He joined The Times in 2007 and previously worked at The Wall Street Journal.
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