Hobbled sports giant ESPN has seen profit plummet 20% in the first nine months of the fiscal year as more cable subscribers cut the cord, according to a rare peek at the Disney-owned network’s finances.
The struggling Mouse House had previously never broken down ESPN’s financials, but offered the inside look as it seeks a strategic investor for what had long been considered Disney’s crown jewel.
According to an SEC filing Wednesday, Disney reported that its sports segment — which includes ESPN, ESPN-related channels, streaming service ESPN+ and sports channel Star India — saw profits plunge 20% to $1.48 billion through the first nine months of fiscal 2023.
Sales declined 1.3% to $13.2 billion.
In this year’s third quarter, the unit posted profit of $854 million on sales of $4.3 billion — more than half of that revenue, $2.6 billion, “came from cable and satellite TV subscribers,” the filing said. Roughly $1.15 billion came from advertising.
One Bloomberg analyst put the value of the sports division at up to $22 billion for prospective partners.
Disney stock, which has hovered nine-year lows, was relatively flat Thursday, trading at $84.67.
Disney CEO Bob Iger has made it no secret that its cable business is facing a number of challenges including cord-cutting and the rising price of sports rights fees. He announced this summer that he was looking for a partner to take a stake in ESPN.
The CEO has explored pacts with the National Football League and National Basketball Association, according to reports.
In order to bolster viewership, Disney said it is planning to make its ESPN cable network available to cord-cutters as a streaming service to adapt to shifting consumer tastes. It is looking into adding a distribution partner to help market the new service and has had talks with Verizon and T-Mobile, The Wall Street Journal reported.
ESPN has been the linchpin of not only Disney’s cable-TV networks, but also of the overall traditional cable bundle, bringing in some of the highest TV fees.
Last month, as football season started, Disney and cable provider Charter Communications were embroiled in a bitter carriage fight, which concluded in the Mouse House channels being turned back on for customers and some gaining access to it streaming services as part of the deal.
Aside from cord-cutting woes, Disney is in the process of reorganizing itself in response to threats of a proxy battle from activist investor Nelson Peltz and his firm Trian Fund Management.
Disney will report fourth-quarter earnings on Nov. 8.