Disney (DIS) has released the official data on the performance of its sports segment, including the revenue and operating income generated by its flagship sports network ESPN.
In a new SEC filing it was revealed that ESPN generated over $16 billion of revenue and $2.9 billion in operating profit for fiscal year 2022, which ended October 1st 2022. Its domestic business generated the bulk of that revenue and profit, with the numbers coming in at $14.6 billion and $2.81 billion respectively.
With the total full-year 2022 revenue for Disney’s sports segment, including its Star India business totaling $17.3 billion, it produced 20 percent of overall revenue.
Currently the company is in search of direct partners which would, through a joint venture, or part ownership, help facilitate the launch of a new ESPN direct-to-consumer (DTC) service.
Affiliate fees accounted for the bulk of the sports segment revenue, at $10.8 billion, followed by advertising at $4.4 billion, with ESPN+ subscription fees at $1.1 billion.
Typically, ESPN has among the highest carriage fees, that is fees paid to network TV owners to carry their channels, of all the basic cable networks. SNL Kagan estimates ESPN charges operators of Pay-TV networks $8-$9 per subscriber.
Sports revenue trended down in the nine months ending July 1st 2023, a 1.3% decline compared to one year prior, according to the new breakout structure.
Tim Nollen, an analyst for Macquarie, noted the figure is “not great” however is is superior to standalone linear network revenue, which has declined 8.7%. He noted that ESPN is under 60% of total linear networks revenue, which works out to about 30% of operating income.
He said, “This update can help set some expectations for both an eventual ESPN OTT service’s financials, and can help set some parameters around valuation of any possible asset divestitures, as Disney has acknowledged could be on the cards.”
Bob Iger, the CEO of Disney, restructured the company in February, into three core business segments, Disney Entertainment, Sports (ESPN), and Experiences.
He said at the time, the reorganization “will result in a more cost-effective coordinated and streamlined approach to our operations, and we are committed to running our businesses more efficiently, especially in a challenging economic environment.”
