Wells Fargo bank analysts are predicting the return of Walt Disney CEO Bob Iger will lead to a spinoff of ESPN and ABC.
While ESPN has been the cash cow of the pair, linear and sports trends are diverging from the core IP. In addition, the sports network is not owned IP or global like Disney, so "we think severing the company is increasingly logical," the analysts stated. ESPN is owned 80% by Disney and 20% by Hearst Corporation.
The analysts also stated they think ESPN and ABC are integrally linked, and are moving away from their streaming contemporaries. They added that owned IP monetizes differently versus licensed IP in sports and will lead to the eventual spinoff of ESPN and ABC. Attendees are reflected in Disney+ logo during the Walt Disney D23 Expo in Anaheim, California, on Sept. 9, 2022.
A spinoff of ESPN by Disney has been long discussed by investors, the Wells Fargo note stated, while rationale for considering the spin is not financial engineering but portfolio improvement.of ESPN but later backed off, after understanding the network's ability to generate ad and subscriber revenues.ESPN+ grew 42% for the year ending Oct 1. to 24.3 million subscribers. Disney+ was up 42% to 164.2 million subscribers.
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