Disney reveals ESPN's financials, proving its sports business isn't 'imploding'

By Emily Bary

'There's perhaps more durability in ESPN's top-line growth than expected,' analyst says

Walt Disney Co. offered investors their first glimpse at ESPN's financials Wednesday with disclosures that struck one analyst as a "relief."

ESPN generated $12.6 billion in revenue during the nine months that ran through July 1, up from $12.3 billion in the comparable period a year before. The business brought in $1.9 billion in operating income during the same span, down from about $2.1 billion in the year-earlier span.

The ESPN breakout includes financials from Disney's (DIS) eight domestic ESPN-branded television channels, along with ESPN on ABC, the ESPN+ streaming service and ESPN-branded international channels.

The business sits within the sports segment of Disney's newly recast financials. On the whole, the sports unit, which also includes Star-branded sports networks in India, brought in $13.2 billion in revenue for the nine months through July 1, compared with $13.4 billion in the same period a year prior. Operating income for the sports segment came in at $1.5 billion over the nine-month period, versus $1.8 billion a year earlier.

"There's perhaps more durability in ESPN's top-line growth than expected," Wells Fargo analyst Steven Cahall wrote. "The real test comes when ESPN launches DTC," meaning the long-awaited streaming service for the flagship network.

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Cahall further noted that excluding Star, the sports business "is not declining at an overly precipitous rate." Disney still has to navigate the eventual move of sports programming from linear television to streaming against the backdrop of soaring rights fees, but the latest financial disclosures "may provide some semblance of relief that the main Sports biz isn't imploding as we speak," he noted.

Disney Chief Executive Bob Iger said earlier this year that traditional TV was near "obsolescence" as he teased a potential sale of linear assets. He also mentioned looking for a strategic partner for ESPN.

Read: Should the NFL buy ABC from Disney? One analyst makes the case.

-Emily Bary

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10-18-23 2210ET

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