Disney Earnings Highlight ESPN Comeback; Iger High on NBA’s Future

Another day, and another major media company is gathering significant momentum.

Roughly 24 hours after Fox reported a robust quarter financially, due in large part to success in sports broadcasting, Disney delivered very similar news. The ESPN parent company said it generated a 5% increase in revenue to $24.7 billion for its fiscal first quarter running from October to December 2024 and boosted operating income by 31% to $5.1 billion. 

Disney’s sports division, led by ESPN, was flat in revenue at $4.85 billion, but segment operating income reversed from a $103 million loss in the comparable period a year ago to a $247 million gain. The company is now projecting a 13% bump in operating income for the sports division during the current fiscal year. 

More broadly, Disney CEO Bob Iger said the improved results were further signs of a streaming-focused strategy—one that includes ESPN now having a featured tile on Disney+—bearing fruit after a difficult multiyear period that included several rounds of layoffs. 

“Our results in Q1 demonstrate our creative and financial strength, and they reflect the success of our strategic initiatives that we set in motion over the past two years,” Iger said Wednesday in a call with analysts.

The quarterly earnings report also arrived less than two weeks after news of Iger boosting his 2024 compensation package by 30% to $41.1 million.

All Things to All People

Iger received numerous questions Wednesday about ESPN’s presence in a rapidly accelerating market for sports-oriented skinny bundles and streaming services, one that involves offerings from DirecTV, Comcast, and ESPN’s own forthcoming “Flagship” service that Iger reiterated Wednesday will be a “sports fan’s dream.”

“The goal all along with ESPN is to make it as accessible as possible, and in as many ways as possible,” he said. “Some will want to consume it just through an app, some as part of the more traditional expanded basic bundle, and some will migrate in the direction of skinnier bundles, or sports bundles only. We plan to take advantage of the emergence of these bundles.”

ESPN+, now nearly seven years old, could be getting somewhat left out in that reshaping market, as subscribers fell 3% during the quarter to 24.9 million, perhaps retreating to a prior pattern of decline. 

Within that sports focus, Iger also was repeatedly queried about sharply heightened NBA rights costs in a contract renewal with the league beginning next season, particularly in the context of current viewership declines that have been a dominant storyline. 

“We obviously believe in the NBA long-term,” Iger said. “We think it’s a growth sport. We don’t really look at ratings year-to-year that carefully. We haven’t even seen half a season [this year]. We’re not distracted in any sense by what’s happening ratings-wise this season. We’re happy to have this now for 11 more years, including the Finals in 10 of those years. It is and will continue to be a marquee part of ESPN’s offering.”

Venu Post-Mortem

Like Fox on Tuesday, Disney also addressed last month’s demise of Venu Sports. Disney is much more involved in this saga, as ESPN was to provide a substantial chunk of the content for that streaming service, and Disney is now acquiring a majority stake in Fubo, which had challenged Venu’s formation. 

Disney said it will incur about $50 million in costs, to be reflected in fiscal second-quarter earnings, related to the shutdown of Venu.

“After the emergence of these skinnier bundles surfaced, Venu basically looked redundant to us,” Iger said.