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ESPN parent company Disney has plenty of optimism for the next year, despite rising economic headwinds, but the near term is still somewhat choppy for the sports media giant.
Disney said Wednesday that it grew revenue 7% to $23.6 billion in its second fiscal quarter that ended March 29, and increased its operating income by 15% to $4.4 billion. Perhaps more importantly, the company also said it is raising its guidance for fiscal 2025, with adjusted earnings projected to rise 16%, and by 18% within its sports operations.
That stance notably differs from several other companies, including some with significant sports ties, that have paused or lowered their financial guidance in the wake of a tariff-fueled trade war initiated by U.S. President Donald Trump.
“Following an excellent first half of the year, we have a lot more to look forward to,” said Disney CEO Bob Iger, referring in part to the forthcoming debut of ESPN’s direct-to-consumer streaming service.
ESPN, however, had a more mixed report for the latest quarter. Domestic revenue rose 7% to $4.2 billion, but operating income fell 17% to $648 million, with earnings particularly hit by increased rights and production costs for the newly expanded College Football Playoff, as well as the timing of the 2024 NFL regular-season schedule. The network additionally took a write-down in the quarter related to the shuttering of Venu Sports in January. Disney previously said those costs would be about $50 million.
The ESPN+ streaming service, meanwhile, ended the quarter with 24.1 million paid subscribers, down 3% from the end of 2024 and equal to the level it reached in mid-2022. ESPN+ has been essentially flat in subscribers since then, suggesting it may have hit a ceiling as more sports content shows up in Disney+. The advertising market there, and on the other Disney streaming services, also faces greater competition, though ESPN overall saw a 29% bump in domestic ad sales during the quarter.
“We continue, as we go into the upfront season, to see robust demand for advertising,” said Disney senior EVP and CFO Hugh Johnston. “One place that continues to be a bit more challenged is on the DTC side, not driven by demand, but driven by supply as we have new entrants into the marketplace.”
Flagship Talk
Disney also continues aggressive preparation for the ESPN DTC streaming service, currently carrying the working name of “Flagship.” The actual name of the service, as well as pricing, will be revealed next week—which is also a frenetic period in which each of the major U.S. media companies make upfront presentations to advertisers.
“The plan would be to basically be somewhat agnostic from a subscriber perspective so that we can still do our best to preserve the [linear] multichannel ecosystem,” Iger said. “At the same time, obviously, we want to grow our DTC business. The difference is that the ESPN linear service, if that’s all the consumer chooses to watch, will not have the bells and whistles and those additional features that the DTC service will have.”
Disney shares surged by 11% in Wednesday trading amid the bullish outlook, closing at $102.09 per share and helping to recoup losses seen over the past two months amid the tariff disputes.
