Disney (DIS) said late Tuesday that ESPN has reached a preliminary agreement with the NFL to acquire media assets including NFL Network, NFL RedZone, and NFL Fantasy in exchange for a 10% equity stake.
The new partnership is expected to expand the reach and visibility of NFL content through Disney’s growing streaming footprint. ESPN plans to integrate NFL Network into its upcoming direct-to-consumer service while maintaining traditional distribution through cable and satellite providers. The companies did not disclose the value of the stake.
“This deal helps fuel ESPN’s digital future, laying the foundation for an even more robust offering as we prepare to launch our new direct-to-consumer service,” Jimmy Pitaro, chairman of ESPN, said in a statement.
ESPN reached a preliminary deal to acquire key NFL Media assets, including NFL Network and RedZone, in exchange for a 10% stake going to the NFL. (AP Photo/Matt Slocum, Archivo) · ASSOCIATED PRESS
Alongside the acquisition, ESPN and the NFL have also entered into a second non-binding agreement. Under the terms, the league will license certain NFL content and intellectual property to ESPN for use across the newly acquired NFL Media assets.
The company will also assume distribution rights for RedZone and merge NFL Fantasy with ESPN Fantasy Football to create a single, official NFL fantasy platform.
As part of the deal, ESPN will license three additional NFL games per season to air on NFL Network. The network will also take over four games from ESPN’s broader NFL schedule, maintaining its slate of seven games annually.
Disney stock rose 2% before the bell on Wednesday.
Analysts see the debut as a key step toward more bundling opportunities with Disney+ and Hulu, as streamers across the industry work to retain subscribers and reduce churn.
Ahead of the NFL confirmation, Morgan Stanley analyst Ben Swinburne wrote in a Monday note, “With the NFL as an investor, ESPN’s long-term future is incrementally more secure.”
He added, “While the NFL cannot stop cord-cutting and will surely not give Disney a discount in future rights renewals, by investing in ESPN, the NFL will be even more motivated to help ESPN survive and potentially thrive in the new streaming-first world ahead.”
The push into streaming comes as Disney continues to adapt to the mass exodus of pay-TV subscribers.
In June, the company laid off several hundred employees across its global operations in a bid to streamline costs, with cuts impacting areas such as TV marketing, publicity, and corporate finance. In a statement to Yahoo Finance, Disney said at the time that it had taken a “surgical” approach to minimize the number of impacted roles, adding that no entire teams were being eliminated.