Disney CEO Bob Iger has enlisted the help of former executives Kevin Mayer and Tom Staggs, paying them a consulting fee, to assist in finding a solution for ESPN's declining revenue. ESPN has faced challenges due to the increasing rate of cable cancellations in the US, which has impacted its ability to generate revenue growth through programming fees. As a result, Iger is exploring strategic alternatives to revitalize ESPN's performance.
One potential option is launching a direct-to-consumer product, which Iger has become more confident about. Currently, ESPN offers lower-rated live games on its ESPN+ streaming service, but the network has yet to offer an unbundled subscription service. The fear is that such a move could further encourage people to cancel pay TV subscriptions.
To mitigate the decline and explore new opportunities, Iger is seeking minority partners to take equity stakes in ESPN. Talks have already taken place with the National Football League, Major League Baseball, the National Basketball Association, and the National Hockey League. However, such a deal could create conflicts of interest and potentially irritate existing media partners.
If finding suitable minority partners proves challenging, ESPN has not ruled out a full spin-off of the network. Iger has previously resisted this idea, expressing a desire to remain in the sports business. Mayer, on the other hand, has been more open to the idea of spinning off ESPN when he previously worked at Disney.
The focus for Mayer, Staggs, and ESPN President Jimmy Pitaro is to find a solution where Disney can retain a majority stake in the network. Currently, Disney owns 80% of ESPN, with Hearst holding the remaining 20%. The search for partners who can bring advantages to ESPN in terms of content or distribution is ongoing, but it remains unclear if there is interest from other strategic companies in owning a minority stake.
Overall, Iger is actively exploring different options to address ESPN's revenue decline and find new ways to revitalize the network. The involvement of Mayer and Staggs, along with discussions with major sports leagues, demonstrates a concerted effort to find a solution that will keep ESPN competitive in the evolving media landscape.