It’s looking more likely by the day that the NFL and ESPN will reach an agreement that will send NFL Media assets to the Worldwide Leader in exchange for an equity stake in the network.
Under the terms of the possible deal, ESPN would receive control of NFL Network, NFL RedZone, and other assorted properties within NFL Media (including seven regular season games) and, in return, the NFL would receive a minority stake in ESPN, which CNBC reported could be around 10% of the network.
There are, of course, many knock-on effects that this deal could have. For one, NFL Network and NFL RedZone could look significantly different under ESPN ownership, both in terms of programming and talent. But more than that, a potential deal would permanently intertwine ESPN with the most powerful league in all of sports. Should the NFL hold a minority stake in ESPN, the league would be incentivized to favor the network over its other partners. Not only would such a deal make ESPN a virtual lock to retain NFL rights when the league’s current broadcast deals expire, but it would also make them a front-runner to secure premier inventory.
But one group of media analysts is taking the potential deal a step further, suggesting that a tie-up between the two entities could pave the way for Disney, ESPN’s parent company, to spin off the network alongside ABC.
Richard Greenfield, Brandon Ross, and Mark Kelley of the media research firm LightShed Partners wrote in a note on Thursday that “The NFL Media acquisition may be the opening move toward spinning off Disney’s linear TV assets: ESPN and ABC combined.”
The trio of analysts cite the NFL’s probable unwillingness to hold a small, illiquid stake in a Disney subsidiary as the primary reason the company may look to spin its networks. “A standalone public ESPN/ABC would offer an easier path to liquidity than the current structure buried within Disney’s corporate layers,” the group writes.
“ESPN and ABC increasingly look like distractions,” they continue. “Neither Disney+ nor Hulu requires vertical integration with ESPN/ABC to succeed. Freeing Disney of ESPN and ABC, would enable the company to pursue far more strategic assets like Epic, Roblox, or other gaming properties, as we’ve repeatedly discussed over the past decade.”
Disney spinning off ESPN is hardly a new idea; people have floated the move for many years. But now, Disney wouldn’t be alone. Comcast is preparing to spin off the majority of its cable assets later this year, and Warner Bros. Discovery isn’t far behind.
Now, ESPN is a completely different animal. The network boasts a much wider selection of sports rights and is definitively a must-have channel for even the most casual sports fans. Obviously, that’s to the network’s benefit.
Who knows if selling a small piece of the network to the NFL is actually enough to get Disney to weigh a potential spinoff more seriously. But if there’s one fail-proof strategy in the live sports arms race, it’s staying on the NFL’s good side. If the NFL ever pushed Disney for an ESPN/ABC spinoff, the company would at least have to seriously consider it.