Disney (DIS) is running for a touchdown.
“We feel terrific about the assets that we’ll be getting for the deal,” Disney CFO Hugh Johnston said on Yahoo Finance’s Opening Bid (video above).
Earlier this week, Disney announced its subsidiary ESPN had reached a tentative agreement with the NFL. Under the deal, the NFL will receive a 10% equity stake in ESPN, while ESPN will acquire key media assets, including the NFL Network, RedZone, and Fantasy.
The strategic move aims to bolster ESPN ahead of its standalone streaming launch later this month, as the service will include NFL content. Johnston said combining the NFL Network with ESPN “will create both revenue and cost synergies” and called the agreement a “win all around” for investors and consumers.
Separately, Disney announced it will spend $1.6 billion over five years to secure exclusive rights to major WWE events, including WrestleMania, for ESPN. “It’s a big investment,” Johnston noted. “But we do expect positive financial returns from the investment.”
JPMorgan analyst David Karnovsky called the ESPN-NFL deals potential “positive catalysts” that may help investors feel more confident about long-term growth in live sports streaming, an area where Disney has a unique strength.
Johnston said the deal deepens ESPN’s live sports bench and gives it more ammunition to bundle content. It also aims to engage super fans across fantasy, betting, and personalized viewing — areas crucial for long-term growth.
The entertainment giant reported its third quarter earnings this morning. Its revenue increased 2% year over year to $23.65 billion, slightly missing analyst expectations. Adjusted earnings per share jumped 16% to $1.61, surpassing estimates of $1.46, according to Bloomberg data.
Disney stock dropped 4% in morning trading.
Disney’s Experiences segment, which includes domestic parks, resorts, and cruise lines, remains one of the most stable and profitable arms of the business, Evercore ISI analyst Kutgun Maral wrote. US parks revenue is up 10% year over year, and Maral said even modest growth in domestic parks could help Disney hit earnings targets over the next two years.
Streaming revenue rose 6%, and operating income hit $346 million, a drastic swing from the $19 million it posted in the year-ago quarter. The company now counts 183 million total subscribers across the segment, which includes Disney+ and Hulu.
The linear networks business dragged down results, with revenue falling 15% year over year while operating income dropped 28%.
