Disney’s executive switch-up could indicate a future ESPN spinoff.
The company announced last month that Bob Iger, who was Disney CEO from 2005 to 2020, will replace his hand-picked successor, Bob Chapek.
Iger resisted an ESPN spinoff in the last years of his prior run as Disney CEO, but Wells Fargo analyst Steve Cahall said he could see a spinoff happening soon.
“We think Bob Iger is returning to [Disney] ready to make big changes,” he said, adding that a spinoff would make the Mouse “an attractive pureplay IP company.”
- ESPN isn’t considered an intellectual property, but Cahall said Disney has become a “franchise IP leader with global scale” through other acquisitions.
- “With linear and sports trends diverging from core IP, we think severing the company is increasingly logical,” he said.
“Investors can build their own portfolios, and we think ESPN inside of [Disney] is a portfolio with less and less logical connection as time goes by,” Cahall said. “As such, to us it’s a reasonably probable event for late 2023.”
In the fiscal year ending Oct. 1, 2022, ESPN lost 2 million subscribers.
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Activist investor Dan Loeb previously pushed for a spinoff but backed off after he gained “a better understanding of ESPN’s potential as a standalone business.”
In September, Disney CFO Christine McCarthy said Disney sees “ESPN as being part of our overall portfolio.”
“We’re very much against spinning off ESPN … that’s the dumbest thing ever,” Jason Bazinet, managing director at Citi, said last month.
