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Yahoo Finance’s Alexandra Canal, Josh Schafer and Madison Mills talk about the appeal of live sports and some of the demanding situations Disney faces in its linear TV business with its streaming unit.
Disney (DIS) has officially released its monetary effects for sports, which come with profits and operating profits generated through its main sports network ESPN.
According to a new SEC filing, ESPN generated more than $16 billion in cash and $2. 9 billion in operating sources of cash in Disney’s 2022 fiscal year, which ended Oct. 1, 2022. Most of that cash and profit came from its domestic operations of $14. 6 billion and $2. 81 billion, respectively.
The effects show how ESPN relates to Disney’s overall sports strategy with overall earnings for the sports segment, which also includes its Star India business, totaling $17. 3 billion for the full year 2022, or 20% of overall earnings.
Currently, the company has become a strategic partner, either through a joint venture or through a partial stake, to enable ESPN to launch a new direct-to-consumer (DTC) service.
Most of the sports segment’s revenue came from associate fees of $10. 8 billion, followed by advertising of $4. 4 billion and ESPN’s subscription fees of $1. 1 billion.
ESPN has the highest distribution fees, or fees that pay-TV providers pay network owners to carry their channels, of all the major cable networks. According to an estimate by SNL Kagan, ESPN charges pay-TV network owners between $8 and $9 per subscriber. .
The new distribution design also caused sports earnings to trend downward in the nine months ending July 1, 2023, down 1. 3% from the same period a year earlier.
Tim Nollen, an analyst at Macquarie, said the figure is “not very good” but is higher than the independent linear network’s revenue, which is down 8. 7%. Overall, ESPN accounts for less than 60% of total linear network revenue, or about 30% of operating revenue.
“This update would possibly help set some expectations related to the financials of a potential ESPN OTT service, and possibly help set some parameters around the assessment of potential asset divestitures, as Disney has stated that this may also be considered,” he said.
In February, Disney CEO Bob Iger restructured the company into three main segments: Disney Entertainment, Sports (ESPN) and Experiences.
At the time, Iger said the new strategic organization “will result in more profitable, coordinated and streamlined operations, and we are committed to managing our business more effectively, especially in a challenging economic environment. “
Alexandra Canal is a senior journalist at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn and email alexandra. canal@yahoofinance. com.
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