Disney’s recent business reorganization is offering investors a rare glimpse into ESPN’s financials, revealing that the sports network’s revenue has been on a declining trend in recent quarters. This insight comes at a time when Disney is actively seeking a strategic investor for ESPN, which was once regarded as a prized asset within the company.
Earlier this year, Disney initiated a comprehensive set of changes to its operations, which involved substantial cost reductions and the unfortunate layoffs of over 7,000 employees. Additionally, the company underwent a restructuring process, dividing its business into three distinct segments.
The company is now broken down into three divisions, one of which is an ESPN segment that includes the TV network and ESPN+ streaming service. This split sports from entertainment, which now includes most of its streaming and media operations. Parks, experiences and products make up the third unit.
Disney is scheduled to release fiscal fourth quarter earnings Nov. 8.
On Wednesday, Disney reported that its sports segment, which includes smaller contributions from Star India, had more than $13 billion in overall revenue for the nine months ended July 1, subtracting the amount from its entertainment segment revenue, where it was previously reported. ESPN generated more than $12.5 billion of that nine-month total.
ESPN’s revenue – the domestic business makes up the bulk of ESPN’s revenue, with some coming from international – has fallen in recent quarters.
The network had roughly $4.06 billion in revenue in the third quarter, down from nearly $4.1 billion in the second quarter and about $4.4 billion in the first quarter, according to Wednesday’s filing.
The report shines a light on ESPN, the cable-TV network that has long raked in high traditional TV fees and viewership for the company – even during a time when the cable providers are losing customers at a fast clip in favor of streaming. Disney’s recent business
ESPN has been the linchpin not only of Disney’s cable-TV networks, but of the overall traditional bundle, reaping some of the highest TV fees. Last month, as football season kicked off, it ignited a carriage fight between Disney and cable provider Charter Communications
, which ended in Disney channels being turned back on for customers and some getting access to it streaming services as part of the deal.
A part of the fight was Disney’s future prospects for ESPN on streaming. Disney plans to make the ESPN channel a direct-to-consumer option outside of the bundle for customers in the future.
The reorganization of Disney had been part of the company’s response to activist investor Nelson Peltz and helped to fend off his firm, Trian Fund Management for a few months. However, last week, Trian upped its stake in Disney and now a second proxy battle is brewing, CNBC reported.