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ESPN+ streams more live sports than any other platform, which costs parent company Disney billions of dollars annually. But that continued push has been the key factor in Disney’s streaming business becoming profitable earlier than anticipated.
On Wednesday, Disney reported earnings from its fiscal third quarter, which ended June 29. Overall, the company brought in revenue of $23.2 billion, slightly higher than the $23.1 billion Wall Street analysts predicted.
But the unexpected good news for Disney came from its direct-to-consumer unit—Disney+, ESPN+, and Hulu—turning a profit for the first time. Those streaming services combined to post a surplus of $47 million. But it was a $66 million profit from ESPN+ that helped offset a $19 million loss from Disney+ and Hulu.
Disney said it originally forecast its overall streaming unit to become profitable next quarter. “The ad market is really, really strong and healthy for us,” Hugh Johnston, Disney’s CFO, said on the company’s earnings call. “And a lot of that is a product of the fact that we have live sports.”
On Tuesday, Disney announced another round of price increases coming to its streaming services in October, with ESPN+ jumping up $1 to $11.99 per month. Disney expects its streaming business, including ESPN+, to remain profitable in the fourth quarter.
Sports for Everyone
Disney still expects to launch an enhanced stand-alone ESPN flagship streaming service in the fall of 2025, with a price yet to be announced. That will be separate from ESPN+.
Venu Sports—ESPN’s joint streaming venture with Fox and TNT Sports parent Warner Bros. Discovery—is still on track to launch this fall. However, three Democratic senators have asked the Department of Justice to investigate and possibly halt Venu, speculating that it may violate antitrust or telecommunications laws or regulations.
Beyond that, in December, the Disney+ app will start featuring an ESPN tile to promote live sports programming to that service’s users. “We obviously are investing significantly in all directions because of the value that it creates and also because of the value that it represents to our future in streaming,” said Disney CEO Bob Iger.
ESPN’s variety of long-term media-rights deals across properties like the NFL, NBA, and college football remain key to Disney’s sports plans. “It secures our ability to bring ESPN in the digital direction,” Iger added.
ESPN’s Future
Iger also addressed Disney’s ongoing efforts to potentially sell an equity stake in ESPN to a league like the NFL or NBA.
“I know I’ve sounded like a broken record because I’ve talked about strategic partnerships for ESPN over the last number of quarters,” Iger said. “The only thing I can say is, believe it or not, we’re still having conversations about it. We thought and continue to believe there may be opportunities to partner with others, particularly on the content side. And that’s why we’ve continued to explore it.”
The NFL has widely been seen as a likely partner, as it continues to evolve its own media division, which includes the NFL Network and NFL+ streaming service.
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