The worldwide leader in sports still has some juice.
ESPN operating income surged 16% from a 12 months ago to $987 million in Disney‘s fiscal fourth quarter — the primary time Disney has ever broken out the sports division’s funds. Revenue within the segment grew 1% year-over-year to $3.8 billion.
Disney also revealed ESPN+ was profitable within the quarter, generating $33 million. That compares to Disney+ and Hulu, Disney’s other streaming services, which lost $420 million within the quarter.
While Disney’s other linear network revenue fell 9%, ESPN’s gains in each operating income and revenue suggest the business is not foundering — whilst sports rights makes up 40% of Disney’s overall content spend. That ought to come as a large relief for investors.
Disney CEO Bob Iger said last 12 months that “linear TV and satellite is marching towards an amazing precipice and it’s going to be pushed off,” declaring that traditional TV will eventually die off completely. The ESPN results suggest the sports network will not be in as dire shape as the remainder of the linear universe.
“It’s on an amazing trajectory,” Iger said about ESPN, in an interview with CNBC’s Julia Boorstin on Wednesday. “And the rankings are literally very strong, too. ESPN had one among the strongest years rankings clever, I believe, within the last 4 or fiveyears in 2023. That is an amazing thing. We obviously are planning to take ESPN out on a direct to consumer basis. We feel great about that.”
While Disney remains to be a 12 months away from breaking even in its streaming business, in keeping with the corporate’s own estimates, ESPN+ already turns a profit. While linear network promoting fell, ESPN promoting had a “modest increase” within the quarter, Disney said in its earnings statement.
None of this erases ESPN’s existential crisis of surviving in a streaming-first world moderately than the cable bundle. Nevertheless it does suggest that ESPN is not as much in crisis mode as some investors have may feared.
Disney has held discussions with the 4 major U.S. skilled sports leagues — the National Football League, the National Basketball Association, the National Hockey League and Major League Baseball — about them potentially taking minority equity stakes in ESPN, CNBC reported in July. Disney has also had discussions with other technology firms “that may add either marketing support, technology support or possibly content support,” Iger said in a CNBC interview Wednesday.
Disney wants to rework ESPN into the preeminent digital sports distribution platform in the approaching years, said Iger, who told CNBC that ESPN’s direct-to-consumer offering will launch no later than 2025.
“ESPN is the No. 1 brand on TikTok with about 44 million followers, which is an incredible statistic,” Iger said during Disney’s earnings conference call. “We feel leaning into it’s the smart thing to do due to its unique quality, how popular it’s, and the way profitable it has been.”
WATCH: Watch CNBC’s full interview with Disney CEO Bob Iger after fiscal fourth quarter earnings.