Disney CEO Bob Iger: We're going to be 'open-minded' about ESPN's future

Disney (DIS) CEO Bob Iger said Thursday the company remains bullish on ESPN's prospects inside the media giant, but said he will be "open-minded" in thinking about the network's long-term future.

"One of the reasons we're optimistic is we know the power and the popularity of live sports and we know how attractive it is. Not just to consumers but to advertisers," Iger said at Morgan Stanley's TMT Conference on Thursday afternoon.

The executive highlighted the network's positive ratings at a time when linear TV is decelerating, in addition to 25 million subscribers for the ESPN+ subscription service.

"At this point, [ESPN+] is what I call a flanker business or brand to the main ESPN brand. Down the road, at some point, I think it's inevitable...[ESPN] will become a direct-to-consumer business," he said, calling out the lucrative combination of live sports, brand value, and advertising. "There's a reason to be bullish."

"We think we're well positioned," Iger said regarding EPSN. "And it doesn't mean that we're not going to be open-minded about its future, but right now, we're bullish about it."

Iger's comments echo what he told investors last month during the company's quarterly earnings call. The executive, who described ESPN as "a differentiator" for Disney, said the biggest challenge centered around monetization but that the ESPN brand was "very healthy."

Industry watchers have long questioned the murky future of ESPN and whether or not Disney should consider spinning off the popular sports network.

Wall Street analysts remain split on a spin-off with some encouraging the move to aid cost rationalization and balance sheet options, while others disapprove given ESPN's cash flow generation. In its most recent fiscal year, Disney's operating income for its Linear Networks segment — which includes ESPN — totaled $8.52 billion.

Last week, CNBC reported ESPN has held discussions with major sports leagues and media partners to launch a feature on ESPN.com and the ESPN app that would link users to all live streaming sporting events.

According to the report, which noted talks are still early and ongoing, ESPN would take a cut of the subscription revenue from a user who signed up for that particular service through the ESPN app or website. If a customer was already a subscriber, ESPN would not reap any monetary benefit but would still provide the link as a courtesy.

Disney, in an effort to slash $5.5 billion worth of costs, announced plans to lay off 7,000 workers and restructure the organization into three core business segments with ESPN as its own standalone unit.

"For the first time, investors will see clean ESPN stand-alone revenue and earnings. [Management] made clear this is not a pre-cursor to a spin-off, but it could provide a window to an eventual move to OTT, when the time is right," Macquarie analyst Tim Nollen wrote after the announcement in February.

In addition to its ESPN business, Disney Entertainment will include the company's full portfolio of entertainment media and content businesses globally, including streaming, while Disney Parks, Experiences and Products will report results as a standalone unit.

Disney shares have climbed roughly 10% since January. The company saw shares slide roughly 45% in 2022, marking the worst annual stock performance for the media giant since 1974.

Alexandra Canal is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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