M+E Connections

Disney sees significant opportunities in the separate deals that the company announced with ESPN, FOX and Warner Bros. Discovery to launch a streaming sports service in the U.S. and Epic Games on Feb. 7 to create a games and entertainment universe, Bob Iger, CEO of The Walt Disney Company, told analysts during an earnings call for his company’s first quarter (ended Dec. 30) on the same day the deal with Epic was announced.

The “full suite of ESPN’s channels will now be available direct to consumer as part” of the new joint venture with Fox and Warner Brothers Discovery, Iger said.

The new streaming sports service will launch this fall, he told analysts, adding it “brings together content from all of these companies’ combined assets, including all the major professional sports leagues and college sports.

Additionally, in fall 2025, Disney will start offering ESPN as a stand-alone streaming option with innovative digital features, creating a “one‐stop sports destination unlike anything available in the marketplace today,” he said.

More Sports Service Details

The streaming sports service will be made available directly to consumers via a new app, but subscribers will also be able to bundle the product, including with Disney Plus, Hulu and/or Max, Disney said.

The platform would aggregate content to offer fans an extensive, dynamic lineup of sports content, aiming to provide a new and differentiated experience to serve sports fans, particularly those outside of the traditional pay TV bundle, according to Disney.

ESPN, FOX and Warner Bros. Discovery plan to form a new joint venture to develop, launch and operate a streaming sports bundle of linear networks and certain DTC sports content and services. Each entity would own one-third of the JV, hold equal board representation and license their sports content to the JV on a non-exclusive basis, and the service would have a new brand with an independent management team, according to Disney,

More details, including pricing, will be announced at a later date Disney said, adding the new service will “showcase thousands of high-profile sporting events.”

More Disney-Epic Deal Details

The new Disney-Epic Games universe will “further expand the reach of beloved Disney stories and experiences,” Disney said Feb. 6 in its announcement for that deal.

Disney will also invest $1.5 billion to buy an equity stake in Epic, an investment that Iger said was “small.” The transaction is subject to customary closing conditions, including regulatory approvals, according to Disney.

Disney’s Overall Strategy

“Just one year ago, we outlined an ambitious plan to return to a period of sustained growth and shareholder value creation, and our strong performance this past quarter demonstrates we have turned the corner and entered a new era,” according to Iger.

As previously stated, Disney is “focused on: transitioning ESPN into the preeminent digital sports platform, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences,” he told analysts.

“Looking at our results this quarter, we can say with confidence our strategy is working,” Iger said.

In Q1, segment operating income increased 27% for Disney, while adjusted earnings per share rose 23% compared to prior year, he pointed out.

Disney also “improved our entertainment streaming operating income by a remarkable 86 percent, year-over-year, and remain poised to reach profitability in our combined streaming business by the end of fiscal ’24,” he added.