Disney's ESPN announces major deals with NFL, WWE, as entertainment company's profits soar

CBS News

a day ago

Disney's ESPN has entered into two landmark agreements just as its parent company reported strong profits and revenue in its fiscal third quarter, led by the strength of its streaming service and domestic theme parks.
The NFL announced Tuesday night that it has entered into a nonbinding agreement with ESPN. Under the terms, ESPN will acquire NFL Network, NFL Fantasy and the rights to distribute the RedZone channel to cable and satellite operators and the league will get a 10% equity stake in ESPN.
The league and ESPN still have to negotiate a final agreement and get approval from NFL owners. The agreement will also have to undergo regulatory approvals.
"Sometimes great things take a long time to get to the point where it's right. And we both feel that it is at this stage," NFL Commissioner Roger Goodell said in a call with The Associated Press.
Along with the sale of NFL Network, the NFL and ESPN will have a second nonbinding agreement where the NFL will license to ESPN certain NFL content and other intellectual property that can be used by NFL Network and other assets that have been purchased.
In another major deal, The Walt Disney Company on Tuesday announced a landmark rights agreement with ESPN and the WWE. As part of the agreement, ESPN platforms will become the exclusive U.S. domestic home of all WWE Premium Live Events, including "WrestMania" and "SummerSlam," beginning in 2026.
"This agreement, which features the most-significant WWE events of the year, bolsters our unprecedented content portfolio and helps drive our streaming future," Jimmy Pitaro, chairman of ESPN, said in the announcement.
"We are proud to reinforce the 'E' in ESPN at such an exciting juncture in its direct-to-consumer journey. WWE Premium Live Events are renowned for exactly the type of rich storytelling, incredible feats of athleticism and can't-miss, cultural tentpole experiences that have become synonymous with ESPN," Mark Shapiro, president and COO of TKO Group Holdings, the parent company of the WWE.
It also raised its full-year adjusted earnings forecast on Wednesday.
The Walt Disney Co. earned $5.26 billion, or $2.92 per share, for the three months ended June 28. A year earlier it earned $2.62 billion, or $1.43 per share.
Excluding certain items, earnings were $1.61 per share. This easily beat the $1.46 per share analysts polled by Zacks Investment Research were looking for.
Revenue for the Burbank, California, company totaled $23.65 billion, falling slightly short of Wall Street's estimate of $23.68 billion.
Disney's direct-to-consumer business, which includes Disney+ and Hulu, posted quarterly operating income of $346 million compared with a loss of $19 million a year ago. Revenue climbed 6%.
The Disney+ streaming service had no change in paid subscribers domestically, which includes the U.S. and Canada. There was a 2% rise internationally, which excludes Disney+ HotStar.
Total paid subscribers for Disney+ came to 128 million subscribers, up from 126 million in the second quarter.
Disney+ and Hulu subscriptions totaled 183 million, up 2.6 million from the second quarter.
In the fourth quarter, Disney anticipates that total Disney+ and Hulu subscriptions will increase more than 10 million compared with the third quarter, with most of the increase coming from Hulu due to the expanded Charter deal, CEO Bob Iger and Chief Financial Officer Hugh Johnston said in prepared remarks.
The company expects a modest increase in the number of Disney+ subscribers in the fourth quarter.
Iger and Johnston also said that Disney will stop reporting the number of paid subscribers for Disney+, Hulu and ESPN+ streaming services because the metric has become less meaningful for evaluating the performance of its businesses. The company will stop reporting the metric for Disney+ and Hulu beginning with fiscal 2026's first quarter and will no longer report the figure for ESPN+ starting with fiscal 2025's fourth quarter.
The Experiences division, which includes Disney's six global theme parks, its cruise line, merchandise and video game licensing, reported operating income increased 13% to $2.52 billion. Operating income climbed 22% at domestic parks. Operating income declined 3% for international parks and Experiences.
Disney announced in May that it will build a seventh theme park in Abu Dhabi.
"We have more expansions underway around the world in our parks and experiences than at any other time in our history," Iger said in a statement. "With ambitious plans ahead for all our businesses, we're not done building, and we are excited for Disney's future."
For fiscal 2025, Disney now anticipates adjusted earnings of $5.85 per share. It previously predicted $5.75 per share. Analysts surveyed by FactSet expect full-year earnings of $5.80 per share.
While Disney continues to pull levers to successfully manage all of the different components of its business, it's also working on its search for a successor to Iger, the face of Disney for most of the past two decades.
Disney created a succession planning committee in 2023, but the search began in earnest last year when the company enlisted Morgan Stanley Executive Chairman James Gorman to lead the effort.
Disney does have some time, as Iger agreed to a contract extension that keeps him at the company through the end of 2026.
Disney is looking at internal and external candidates. The internal candidates are widely believed to include the chairman of Disney-owned ESPN, Jimmy Pitaro, Chairperson of Walt Disney Parks and Resorts Josh D'Amaro, Disney Entertainment Co-Chairman Alan Bergman and Disney Entertainment Co-Chairman Dana Walden.