Weekly Column: After ESPN-PENN Deal, What is Next for Disney?

In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about Disney's business strategy through CEO Bob Iger post-ESPN-PENN.

You can read the full column below.

Disney CEO Bob Iger’s business strategy has been one of moving towards getting younger, more vibrant, and interesting through new on-air talent, but also saving dollars. It has also been one of getting smaller and seeking partnerships to help seem more appealing for purchase, partnerships, and to appease stockholders. The ESPN-PENN deal discussed last week is proof that ESPN needed an influx of cash and a strategic partner to grow, survive, and thrive in a sports world dominated by replays, social media, and sports betting to increase engagement. The ESPN-PENN partnership will accomplish each of those aforementioned things to potentially stabilize ESPN from hemorrhaging cable subscriber loses and to look to ESPN+ and streaming for the future.

Disney may also be looking for ways to partner in streaming opportunities. For example, in exchange for sharing the illustrious Disney content library, another streamer might be willing to partner on sharing its streaming platform. Although short of a merger or acquisition, a shared-streaming deal might also avoid the federal government of the United States of America through the U.S. Securities and Exchange Commission (SEC) from inserting itself to regulate and prevent such a deal from occurring.

Disney may also be looking to get smaller and moveable by trimming business opportunities, assets, and employees (e.g., talent, television, and Indian entertainment division) acquired during Iger’s last term as CEO so Disney can be purchased by a company like Apple, or more likely to make the shareholders and traders on Wall Street happy by continuing growth and shedding debt. According to The Hollywood Reporter, some analysts believe that there will be four streaming platforms when all the dust settles: Apple, Amazon, Netflix and one other (e.g., Disney or a combined Disney company) with NBCUniversal, Warners and Paramount potentially partnering on one platform or licensing their content to a better-positioned streamer. Interestingly, a thought once inconceivable based on its size, history, and library, Disney may be on the outside looking in when compared to much larger companies with more cash to make deals like Apple and Amazon as those companies are diversified beyond entertainment, media, and sports. It would be an epic battle between Apple, Amazon, Netflix, and Comcast for the Disney library should the company ever consider selling. Iger’s fondness for the late Steve Jobs might push Disney to an Apple sale, then again it would surely change Apple’s culture and be met with serious resistance from the SEC.

During Iger’s first term as CEO, he reigned supreme over business and seemingly could not make a bad deal. Consider the following, during Iger’s fifteen year term (2005-2020) before coming back in November 2022, he led with the purchases of Pixar, Marvel Entertainment, LucasFilm, 21st Century Fox, and a stake in Hulu, which is now at 67%, but with a full sale pending from Comcast (NBCUniversal) to Disney in 2024. Iger also revamped the Disney Animation Studio, the theme parks, and launched the third most popular streaming service in Disney+. Those assets may prove to be too much to manage for one company. Disney CEO Bob Iger loves to make deals, so do not count out the House of Mouse just yet from making yet another business move.

About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.