May 7, 2024

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ESPN’s parent company, Disney, shows yet again that its shift to a streaming-based media business will be an uneven path. … Warner Bros. Discovery CEO David Zaslav has a rather different vibe now when talking about the NBA. … Formula One posts a historic and perhaps unexpectedly strong viewership number for the Miami Grand Prix. … Plus: More on the WNBA, the Knicks-Pacers playoff series, Vivid Seats, and potential private equity investment of NFL teams.

— Eric Fisher [[link removed]]

Disney’s Bumpy Streaming Shift: ESPN+ Subscribers Drop Again [[link removed]]

Ron Chenoy-USA TODAY Sports

Disney CEO Bob Iger said Tuesday with the release of the company’s latest earnings report that the company’s conversion to a streaming-based media business wasn’t going to be a “linear” path. He definitely wasn’t kidding.

The company’s results for its fiscal second quarter of 2024 showed just how mixed—and sometimes messy—of a situation that large-scale transition still is. Disney said that it posted a first-time quarterly profit for its direct-to-consumer operations, with the exception of ESPN, moving the company closer to its prior projection [[link removed]] of full DTC profitability by the end of the fiscal year. But subscriptions for ESPN+ retreated for the second straight quarter and third time in four quarters, and now stand at 24.8 million—the level it was at early last year. ESPN+ also posted a $65 million operating loss for the quarter, more than overtaking the $47 million gain for the rest of Disney’s DTC businesses.

Disney sought to tag the ESPN+ subscriber decline to normal seasonality, particularly with the latest quarter following the conclusion of the 2023 college and pro football seasons. But before last summer [[link removed]], ESPN+ showed more than five years of uninterrupted subscriber growth.

Amid that choppiness, Disney shares fell 10% in early Tuesday trading, rolling back a chunk of a broader gain of more than 28% so far this year. That retreat happened despite a 1% growth in revenues and a 30% jump in diluted earnings per share that beat analyst projections, as well as a recent win [[link removed]] in a shareholder proxy battle.

There was some other upside in the streaming results, however, as Disney said its average revenue per user for ESPN+ rose 3% from the first quarter to $6.30.

In other developments from the Disney earnings release and call with financial analysts:

Iger said he was “confident” of completing a long-term rights renewal with the NBA, essentially confirming recent reports [[link removed]] that ESPN was advancing significantly on a new deal. He also lauded the league’s long-term trajectory, saying “this is a sports product with growth ahead of it, with great demographics. We feel really good about the potential package that we will end up with, basically enabling ESPN to continue to shine in the television sports business.” The CEO also touted the continued value of ESPN in a rapidly changing media landscape, and in particular lauded the power of the live programming it offers. “There’s nothing like ESPN in the sports world and their hand is solid for the next decade,” Iger said. ESPN will be featured by the end of the year on a tile within Disney+, with it providing access to select live games and studio programming to U.S. subscribers. That presence with Disney+ also represents something of a precursor to the availability of a full DTC version of ESPN that will debut in the fall of 2025. “It’s a start of essentially conditioning the audience on Disney+ and Hulu that sports are going to be there,” Iger said. Once that full DTC version of ESPN arrives, ESPN+ will be embedded within the flagship product for those subscribers but also will still be offered separately. Password Crackdown

Disney plans a crackdown on streaming subscription password sharing, not unlike the similar process recently pursued by chief rival Netflix. Iger praised Netflix’s efforts in this area and called that company a “gold standard” in streaming.

“We feel quite bullish about [the password effort],” Iger said. “Obviously, we’re heartened by the results that Netflix has delivered in their password sharing initiative, and believe that it will be one of the contributors to [financial] growth.”

Warner Bros. Discovery CEO’s About-Face on Rights: ‘We Love the NBA’ [[link removed]]

Brad Penner-USA TODAY Sports

Facing immense pressure to hold on to the company’s NBA rights, Warner Bros. Discovery CEO David Zaslav is now conveying a different tone regarding the league.

In November 2022, Zaslav stunned both the sports world and investor community by proclaiming [[link removed]], “We don’t have to have the NBA.” Fast-forward roughly 18 months, and Zaslav’s discussion of the league is definitely not the same.

“We continue to be in constructive negotiations with the NBA,” Zaslav said Monday at the Milken Institute Global Conference in California. “It’s a great league. The TNT team does a terrific job. And we love the NBA.”

There’s obviously plenty of subtext in what Zaslav was saying before, and still is now. Back in 2022, the NBA rights negotiations for the next term beginning in ’25 had yet to fully begin. Zaslav, meanwhile, would hardly be the first network executive to try to tamp down public expectations of a future rights deal, and he said then that WBD’s approach to the NBA would need to be “very disciplined” and a “deal for the future.”

Much has changed, however, since then. An exclusive negotiation period for both WBD and fellow incumbent rights holder ESPN has now expired, and recent reports point to Comcast’s NBC Sports making an aggressive effort [[link removed]] to acquire an NBA rights package, along with separate efforts by ESPN as well as online retail and streaming giant Amazon.

WBD does have matching rights [[link removed]] within its current NBA deal, providing a level of protection in these negotiations. But the possibility of the company losing its relationship with the league after 40 years has already seeped into rising questions about the future of TNT’s Inside the NBA and the status [[link removed]] of star broadcaster Charles Barkley. WBD’s stock, meanwhile, has lost nearly one-third of its value so far this year, with a drop of nearly 10% last week driven [[link removed]] in part by reports the network could lose the NBA rights.

‘A Big Deal’

Zaslav also touted the power of sports, and the NBA particularly, as a uniting force in society, not unlike the bullish forecast for the league offered Tuesday by Disney CEO Bob Iger.

“Sports [are] a big deal because … it’s a shared experience,” Zaslav said. “We’re all watching the [playoff game between] the Knicks [[link removed]] and the Pacers tonight. We’re all watching the Super Bowl together. [Sports] reminds us that we have so much more in common than what differentiates us.”

The subject of the NBA rights is almost certain to arise when WBD releases quarterly earnings Thursday.

SPONSORED BY DICK’S SPORTING GOODS

Journey to the Starting Line

For this year’s 128th running of the Boston Marathon [[link removed]], the cutoff time was 5 minutes, 29 seconds faster than the qualifying standards, unfortunately resulting in more than 11,000 runners being turned away. But Dick’s Sporting Goods jumped in to give three of them a second chance to run Boston.

Dick’s Sporting Goods teamed up with Front Office Sports and the Boston Athletic Association to identify and chronicle three deserving athletes [[link removed]] to receive race bibs: John Neusch, Carly Curcuru, and CJ Reuland. These Boston locals, all of whom have qualified but have never run in the Boston Marathon, will now have the opportunity to achieve their long-sought-after goal.

Watch John, Carly, and CJ’s journeys to the starting line here [[link removed]].

ONE BIG FIG F1 Hits High Gear

John David Mercer-USA TODAY Sports

3.1 million

Average viewership for the Miami Grand Prix on Sunday, representing Formula One’s largest U.S. TV audience on record. The mark eclipsed the 2.6 million for the debut version of the event in 2022, and beat last year’s adjusted mark of 2.1 million by 48%. There had been some questions [[link removed]] about viewership going into the weekend, but not only did the Miami GP further establish itself as a fixture on the overall F1 calendar, but it also reached a whole new level of prominence. Viewership of the race peaked at 3.6 million, and the three iterations of the Miami GP to date now represent the top live U.S. audiences in F1 history.

STATUS REPORT Three Up, One Push

USA TODAY Sports

WNBA exposure ⬆ Speaking of Disney, the league will see its opening-night doubleheader May 14—including Caitlin Clark’s regular-season debut with the Indiana Fever—shown on Disney+ in addition to planned coverage on ESPN platforms. The move, representing the first of what will be many sports events on Disney+ in the U.S., gets these games in front of the platform’s 117.6 million subscribers and extends a growing collaboration among the various parts of the Mouse’s streaming operations.

Knicks-Pacers drama ⬆ After a dramatic Game 1 playoff win Monday for New York in the teams’ second-round matchup, former Pacers star and Knicks tormenter Reggie Miller (above) said he plans to return to Madison Square Garden on Wednesday for Game 2. Miller will work as an analyst for TNT. “Just know, the Boogeyman is coming back in town to call the game,” Miller said on The Dan Patrick Show. Miller insisted he will not show “any favoritism” toward Indiana, but expects to hear boos nonetheless from New York fans.

Vivid Seats ⬆⬇ The publicly traded ticket marketplace reported fiscal first-quarter results that included an 18% jump in revenue to $190.9 million and a 65% drop in net income to $10.7 million.

Potential private equity investors of NFL teams ⬆ A long-discussed and oft-delayed consideration [[link removed]] by the league of allowing private equity ownership of individual teams could be moving back to the front burner. Bloomberg reported [[link removed]] that proposals will be presented at a meeting later this month allowing for as much as 30% ownership of teams by private equity investors. Every other major men’s pro sports league in the U.S. already allows such investments.

SPONSORED BY DICK’S SPORTING GOODS

Celebrating National Runners Month

Gear up for the 15th annual National Runners Month [[link removed]] at America’s No. 1 Running Destination, Dick’s Sporting Goods.

Get your next pair of running shoes fast with One-Hour Pickup, Same-Day Delivery, and more convenient ways to shop. Plus, enjoy the latest launches [[link removed]] from top running brands like Hoka, On, Nike, Brooks, ASICS, New Balance, Adidas, and more.

So, get ready for your next mile [[link removed]] this May with a fresh pair from Dick’s Sporting Goods in celebration of National Runners Month.

Conversation Starters Gatorade has secured a multiyear endorsement deal [[link removed]] with A’ja Wilson, a back-to-back WNBA champion with the Las Vegas Aces. Dale Earnhardt Jr., who has been with NBC since 2018 as a NASCAR analyst, is planning to join [[link removed]] TNT and Amazon in ’25. A man of his word: Drafted out of high school in 2004, Dexter Fowler made a promise to his parents to complete his education. After a 14-year MLB career, in which he earned more than $100 million, won a World Series, and established two companies, Fowler is fulfilling that pact [[link removed]] by graduating from Penn State. Editors’ Picks Another Court Sides With Zion Williamson’s Years-Old Firing of Unregistered Agent [[link removed]]by Margaret Fleming [[link removed]]There isn’t a rigorous or nationwide standard to rep a college athlete. Roger Penske Suspends Four Team Members Ahead of Indy 500 for Cheating Scandal [[link removed]]by Alex Schiffer [[link removed]]The push-to-pass scandal has rocked IndyCar in recent weeks. Angel Reese Finds Time for Met Gala Debut Between Practice and Preseason [[link removed]]by Margaret Fleming [[link removed]]The Sky rookie flies back to Chicago for a preseason game Tuesday. Advertise [[link removed]] Awards [[link removed]] Learning [[link removed]] Video [[link removed]] Podcast [[link removed]] Sports Careers [[link removed]] Written by Eric Fisher [[link removed]] Edited by Matthew Tabeek [[link removed]], Catherine Chen [[link removed]]

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