Disney Has Big News for Sports Fans On What It Will (and Won't) Do

The Mouse House CEO Bob Iger shared his thoughts on the future of ESPN and the one line Disney won't cross.

Sports never come to mind when people think of the Disney brand because the company has kept its ABC and ESPN sports properties separate from its core properties. Brands like Marvel, Pixar, and Star Wars have been integrated into the company's theme parks, and all have major real estate on its Disney+ streaming app.

The company's sports properties have sort of been siloed in their own worlds. There is an ESPN facility at Florida's Disney World, but it's not part of the core theme park offering. Instead, it's a facility set up to host sporting events that happen quite often but aren't really part of Disney World.

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Walt Disney (DIS) - Get Free Report CEO Bob Iger, however, has been adamant that the company has big plans for ESPN and ABC sports. Since taking the top job back, Iger has shot down any discussion that the company might sell ESPN and exit the sports business. In fact, one of the returning CEO's first acts was to reorganize upper management putting ESPN boss Jimmy Pitaro broadly in charge of the company's full range of sports properties.

Iger spoke about those moves during the Morgan Stanley Technology, Media, and Telecom Conference.

"And so Jimmy is accountable specifically for his business for its cost and its revenue generation and decide -- we finally decided that not all sports are global, we know that. But sports are becoming more global. If you look at the NBA, that's a great example of that, or even the popularity of what the Europeans call football, in the United States" he said. "It suggests that there may be an opportunity to look more globally at what we license and how we program and how we manage that business and maybe also how we brand."

Live Sports Still Drives Linear TV Ratings

Iger remains bullish on the idea that people generally still watch sports live in the traditional way they always have. That makes ESPN and ABC sports inventory incredibly valuable to advertisers.

"Well, I think one of the reasons we're optimistic is we know the power and the popularity of live sports, and we know how attractive it is, not just to consumers but to advertisers. It's a great play for advertisers. And with all the disruption and all of the choice that consumers have, you look at ratings for sports, particularly the NFL, it's extraordinary when you think about it," he shared.

The CEO also made it clear that ESPN has been a strong digital business, even though ESPN+ is sort of extra and shoulder programming, not a streaming version of the television channels.

"And if you look at ESPN's ratings, ESPN's ratings have actually held up nicely, particularly when you consider the erosion of the platform that they're on. Then, we have to look at what ESPN+ has done, which -- 25 million subs is nothing to sneeze at. And it's -- at this point, it's what I call a flanker business or brand to the main ESPN brand," he added.

Iger also made it clear that a some point an actual streaming ESPN will happen.

"Down the road, at some point, I think it's inevitable because of what's happening in media in the world and technology will become a direct-to-consumer business. And when you give -- when you combine the strength of live sports and the brand and the value of advertising so that you can create a business that's not just subscriber-dependent but dependent on advertising and subscriber revenue, I think there's a reason to be bullish," he said.

Disney Bets On Sports Betting, But Not Exactly

While ESPN and ABC -- really all mainstream sports broadcasters -- were slow to embrace sports betting, that has very much changed. With more states legalizing sports betting and advertisers spending heavily in that area, it would be a poor financial choice to not simply accept that sports betting has moved from the shadows into the light.

Iger made it clear that Disney was not above being in the sports betting space, but he also acknowledged that it was a process.

"There are opportunities, not for us to go into the betting business, but we've talked about this and it's something that my predecessor was very interested in to incorporate elements," he said. "We're already doing it, betting. Fox is doing it, too."

The CEO made it clear that any decisions would be based in what consumers want and expect.

"I think that's important for consumers, particularly young consumers. I mentioned earlier in another meeting, I have were two sons who are 24 and 20. And it's not just about fantasy sports, but they're interested in it. And I prefer to wait as long as possible. But when I think about them -- but I think it's inevitable that there'll be basically a seamlessness between sports programming and sports betting," he added.