August 7, 2024

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Disney made its first quarterly streaming profit, and it can thank ESPN+. We dive into how a sports expansion is covering losses elsewhere and what that could mean for ESPN’s future.

— David Rumsey [[link removed]] and Colin Salao [[link removed]]

ESPN+ Leads Disney’s Streaming to First-Time Profit Despite High Costs [[link removed]]

Nathan Ray Seebeck-USA TODAY Sports

ESPN+ streams more live sports than any other platform, which costs parent company Disney billions of dollars annually. But that continued push has been the key factor in Disney’s streaming business becoming profitable earlier than anticipated.

On Wednesday, Disney reported earnings from its fiscal third quarter, which ended June 29. Overall, the company brought in revenue of $23.2 billion, slightly higher than the $23.1 billion Wall Street analysts predicted.

But the unexpected good news for Disney came from its direct-to-consumer unit—Disney+, ESPN+, and Hulu—turning a profit for the first time. Those streaming services combined to post a surplus of $47 million. But it was a $66 million profit from ESPN+ that helped offset a $19 million loss from Disney+ and Hulu.

Disney said it originally forecast its overall streaming unit to become profitable next quarter. “The ad market is really, really strong and healthy for us,” Hugh Johnston, Disney’s CFO, said on the company’s earnings call. “And a lot of that is a product of the fact that we have live sports.”

On Tuesday, Disney announced another round of price increases coming to its streaming services in October, with ESPN+ jumping up $1 to $11.99 per month. Disney expects its streaming business, including ESPN+, to remain profitable in the fourth quarter.

Sports for Everyone

Disney still expects to launch an enhanced stand-alone ESPN flagship streaming service in the fall of 2025, with a price yet to be announced. That will be separate from ESPN+.

Venu Sports—ESPN’s joint streaming venture with Fox and TNT Sports parent Warner Bros. Discovery—is still on track to launch this fall. However, three Democratic senators have asked [[link removed]] the Department of Justice to investigate and possibly halt Venu, speculating that it may violate antitrust or telecommunications laws or regulations.

Beyond that, in December, the Disney+ app will start featuring an ESPN tile to promote live sports programming to that service’s users. “We obviously are investing significantly in all directions because of the value that it creates and also because of the value that it represents to our future in streaming,” said Disney CEO Bob Iger.

ESPN’s variety of long-term media-rights deals across properties like the NFL, NBA, and college football remain key to Disney’s sports plans. “It secures our ability to bring ESPN in the digital direction,” Iger added.

ESPN’s Future

Iger also addressed Disney’s ongoing efforts to potentially sell [[link removed]] an equity stake in ESPN to a league like the NFL or NBA.

“I know I’ve sounded like a broken record because I’ve talked about strategic partnerships for ESPN over the last number of quarters,” Iger said. “The only thing I can say is, believe it or not, we’re still having conversations about it. We thought and continue to believe there may be opportunities to partner with others, particularly on the content side. And that’s why we’ve continued to explore it.”

The NFL has widely been seen as a likely partner, as it continues to evolve its own media division, which includes the NFL Network and NFL+ streaming service.

Noah Lyles Eyes Historic Olympic ‘Double,’ Iconic Signature Shoe [[link removed]]

Kirby Lee-USA TODAY Sports

Noah Lyles (above) is headed to the finals of the 200-meter sprint after placing second in his semifinals heat.

Despite not winning his heat, he is still the heavy favorite to win the 200-meter sprint in Paris since he is a three-time world champion in the event. Lyles also placed second in his semifinal heat in the 100-meter event before taking home gold in the final.

With a win Thursday, the U.S. track star can become the first sprinter since Usain Bolt in 2016 to take gold in both the 100- and 200-meter races, known as the prestigious “double.”

Lyles solidified his spot as one of the most marketable Olympians after winning the 100-meter sprint Sunday. But the Adidas-backed sprinter declared [[link removed]] he wants a signature shoe, an accomplishment saved for some of the top athletes in major sports, including Bolt. Achieving the “double” would improve Lyles’s case, especially given his marketable, albeit polarizing [[link removed]], personality.

“I want my own shoe. I want my own trainer. I’m dead serious.” Lyles told reporters in Paris. “I want a sneaker. There ain’t no money in spikes. There’s money in sneakers. And even Michael Johnson didn’t have his own sneaker.”

Sponsorship Restrictions

Lyles was direct about his desire for a signature shoe, but he never once mentioned Adidas during his press conference.

While athletes are allowed to secure personal sponsorships anytime during the Games, the IOC’s Rule 40 [[link removed]] severely limits the amount of public interaction Olympic athletes can have with any partners not sanctioned by the Olympics for a particular event or team—like Adidas, in this case.

An example of how granular Rule 40 can be is that an athlete can thank each personal sponsor only once during the entirety of the Games.

“During the Games Period, you may provide one simple ‘thank-you’ message to each of your Non-Olympic Partner personal sponsors,” the Rule 40 FAQ states.

Nike is also the national team sponsor for the U.S., which is why Lyles sports the Swoosh on his tracksuit despite wearing Adidas racers.

New Heights

A signature shoe would be another step in Lyles’s journey to grow and transcend the sport.

Lyles was the main subject of the Netflix docuseries Sprint, released last month, and said it was “amazing” in giving fans a deeper look into track and field. But he hopes the sport can amass attention beyond the Olympics.

“I want to see a continuation of the ability to take advantage of moments for our sport,” Lyles said. “This needs to be accessible because this is a world sport, so we need to be able to show it to the world.”

SPONSORED BY CISCO

Team Cisco Takes on Paris

Cisco is proud to support Team Cisco athletes Nelly Korda (USA), Hannah Green (Australia), and Viktor Hovland (Norway) as they pursue their dreams both on and off the course. This week, we cheer them on as they take on the world in Paris!

Cisco is reimagining how fans, athletes, teams, and organizations experience sporting events. Learn more [[link removed]] about Cisco’s impact across the sports and entertainment industry.

LOUD AND CLEAR Two-for-One

Christopher Creveling-USA TODAY Sports

“It provides security for the future.”

—IOC future Olympic Games hosts director Jacqueline Barrett, on last month’s decision to simultaneously award the 2030 and 2034 Winter Olympics to France and Salt Lake City, respectively. The International Olympic Committee wasn’t originally planning on a double allocation but pivoted. “We thought we don’t want to let these projects go,” she told Reuters [[link removed]].

Looking ahead, the IOC will consider drastic changes to how it picks Olympic host cities, including creating a short list of potential recurring hosts. “We are looking at grouping, sharing, or looking at rotation,” Barrett said. “We are not limiting ourselves to one position.”

STATUS REPORT Two Up, One Down, One Push

Randy Sartin-USA TODAY Sports

Pelicans ⬆⬇ The NBA franchise will broadcast its local games on free, over-the-air TV starting in the 2024–2025 season through a partnership with Gray Television, according to NOLA.com [[link removed]]. Last week, the Pelicans were reportedly [[link removed]] one of five NBA teams at risk of Diamond Sports Group terminating their regional sports network deal. By choosing to go over-the-air, the team will increase distribution but could feel a significant cut in its revenue.

MLB ⬆ Historic Bristol Motor Speedway (above) will host an MLB regular-season game between the Braves and Reds in 2025, according to The Athletic [[link removed]]. It could break the MLB single-game attendance record [[link removed]]—115,300 for a preseason game in 2008—since the NASCAR track fits nearly 150,000 people for races and, in 2016, drew about 157,000 for an NCAA football game.

Tropical Storm Debby ⬇ Coastal Carolina’s football team, which plays in the Sun Belt Conference, will relocate [[link removed]] its training camp to North Carolina State, about 160 miles away, for at least the remainder of the week due to the storm. The Chanticleers arrived Tuesday and will assess after this week whether it can return home. This is the third time since 2018 that the team has had to switch locations due to weather conditions.

US Open ⬆ The final tennis Grand Slam remaining on the 2024 calendar will increase [[link removed]] its purse to a record $75 million, up 15% from last year. The men’s and women’s singles champions will each receive $3.6 million, a 20% increase over the $3 million in 2023. The prize money is the largest of the four tennis majors.

FRONT OFFICE SPORTS EVENTS

Highlights From the Hamptons

Last Friday, Front Office Sports hosted its inaugural Huddle in the Hamptons [[link removed]] event in East Hampton, bringing together industry VIPs, tastemakers, athletes, and powerbrokers.

The event kicked off with conversations led by Wale Ogunleye, Midge Purce, Marques Colston, Renee Montgomery, Scott Havens, and Constance Schwartz-Morini. Following the panels was an afternoon of networking, lunch, cocktails, and a pickleball tournament.

Thank you to our official partners UBS, Crystal, and Saratoga Water for supporting the event.

To learn more about the event or how you can become involved, visit our website [[link removed]]. See you next year!

Conversation Starters Mariners outfielder Mitch Haniger organized a “reverse signing” with Seattle Children’s Hospital, where the players got the kids’ autographs. Check it out [[link removed]]. Nike launched an ad to celebrate Kevin Durant breaking USA Basketball’s all-time scoring record for men and women, and it was narrated by Deion Sanders. Watch it here [[link removed]]. The Olympics staff converted the Bercy Arena in Paris from a gymnastics venue to a basketball court in just one day. See the time lapse [[link removed]]. Editors’ Picks ‘Kangaroo Court’ NCAA Drops Hammer on NFL Coach Jim Harbaugh [[link removed]]by Margaret Fleming [[link removed]]The sanctions are not related to the sign-stealing scandal. NWSL Star Midge Purce Tired of ‘Derivative’ Marketing in Women’s Sports [[link removed]]by Margaret Fleming [[link removed]] and Daniel Roberts [[link removed]]The NWSL champion is debuting a reality series focused on 11 players. Sens. Bernie Sanders, Elizabeth Warren Ask DOJ to Investigate Venu Sports [[link removed]]by Margaret Fleming [[link removed]]Venu is a sports streaming combination of Disney, Fox, and Warner Bros. Discovery. Advertise [[link removed]] Awards [[link removed]] Learning [[link removed]] Video [[link removed]] Podcast [[link removed]] Sports Careers [[link removed]] Written by David Rumsey [[link removed]], Colin Salao [[link removed]] Edited by Matthew Tabeek [[link removed]], Or Moyal [[link removed]], Catherine Chen [[link removed]]

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