The Walt Disney Company has decided against spinning off ESPN, an option that had apparently been under consideration, according to a report by Peter Kafka of Business Insider. New Disney CEO Josh D’Amaro may opt to “revisit” the decision in the future, but for now the topic is a “non-discussion.”
Disney, through its indirect subsidiary ABC Inc., currently owns a 72% stake in ESPN, while Hearst Corporation (18%) and the National Football League (10%) are its minority stakeholders.
ESPN executives have long downplayed the possibility of a spinoff. In February, ESPN chairman Jimmy Pitaro in an interview with CNBC said that ESPN is “a big part of The Walt Disney Company’s strategy and future.” Pitaro added that he and D’Amaro were “very much aligned” about ESPN. “He very much understands the power of live sports,” Pitaro said of D’Amaro. “We all understand the power of live sports at Disney. All you have to do is look at our ratings and look at our digital growth and what we’re doing on social, but Josh especially gets it, so we’re very pleased.”
Pitaro also mentioned in that same interview that he had been hearing rumors of Disney choosing to spin off ESPN since the day he started working at the network.
Before D’Amaro was announced as the next Disney CEO, Alex Sherman of CNBC reported that the company’s board had not asked CEO candidates about spinning off ESPN.
ESPN has continued to remain profitable, finishing the last fiscal year with $2.81 billion in operating income (domestic + international), although it marked a 5.97% YoY decline. The Sports segment as a whole finished with operating income of $2.89 billion, marking a 19.8% YoY gain. The other Disney business segments — Entertainment and Experiences — combined for $14.6 billion in OI.
Disney did not break out ESPN separately from its Sports segment in its last earnings report. The company registered operating income of $191 million (-23% YoY), part of which was affected by the 15-day carriage dispute with YouTube TV. Disney estimated the blackout to result in a decline in Sports operating income of approximately $110 million. ESPN recently engaged in layoffs that were believed to be in part related to the blackout-caused dip, per a report by John Ourand of Puck.
Disney financial guidance for Q2 2026 forecasts a decline in Sports operating income of $100 million because of “higher rights expenses.” The company reports its earnings next Wednesday before the stock market opens, but it has not broken out its DTC paid subscriber numbers by service since the start of the fiscal year. Disney plans to eliminate the standalone Hulu app and phase the service into Disney+ this year, but both services remain available as part of a bundle with ESPN Unlimited for $36/month.
Nielsen measured ESPN to have 61 million subscribers across MVPD and vMVPD services last September. The metric was down by 5 million subscribers from the previous year amid cord cutting and changing distribution verticals. Even so, ESPN total-day viewership increased 7% in Q1 to 937,000 per day. It should be noted that Nielsen adopted new methodology last fall combining its Panel measurements with “Big Data” television metrics and is in the second full year of its out-of-home viewing estimates covering the entire contiguous United States.
ESPN closed its deal to acquire NFL Network and the pay television distribution rights to NFL RedZone earlier this year, and the league gained a 10% equity stake in the network. As part of the series of agreements, ESPN licensed three new NFL game windows and moved four of its existing matchups to NFL Network, ensuring the network will continue to carry seven games per year. YouTube is in advanced talks with the NFL about a five-game package, according to a report by Ryan Glasspiegel of Front Office Sports.
Disney next year will carry the Super Bowl for the first time since February 2006, with coverage simulcast both on ABC and — for the first time — ESPN.
Pitaro has not ruled out deals with other sports leagues similar to its agreement with the NFL, although they would need to “make business sense.” Disney said in a recent SEC filing that its deal to acquire NFL Media assets had an “estimated fair value” of “approximately $3 billion.” The NFL’s 10% equity stake in ESPN could also expand by 4%, although it is unknown what would trigger the increase. Disney can re-purchase the ESPN stake owned by the NFL after July 2034 in exchange for a 10-year note at 70% of the fair market price.
