Disney engages in preliminary talks with major sport leagues to possibly explore strategic partnership: report

Executive leadership at ESPN and its parent company Disney have engaged in preliminary discussions about the possibility of a deal that would bring major American professional sports leagues on as minority investors, according to a report from CNBC.

Disney CEO Bob Iger and ESPN President Jimmy Pitaro are believed to have been involved in the talks with the NBA, NFL and MLB, CNBC reported, citing a person with knowledge of the situation.

ESPN reportedly held the discussions with the leagues as the cable sports network considers creating a strategic partnership. "We have a longstanding relationship with Disney and look forward to continuing the discussions around the future of our partnership," an NBA spokesperson said in a statement. ESPN, the NFL and MLB have not commented on the matter.

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The NFL's media assets consist of NFL Network, RedZone and NFL.com.

Warner Bros. Discovery and Disney currently have exclusive negotiating rights with the NBA. TNT, which is owned by Warner Bros. Discovery, holds the broadcasting rights to a sizable NBA package, while ESPN handles the broadcasts for a considerable amount of regular and postseason NBA games.

Both companies' negotiation exclusivity expires in 2024.

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In a recent interview with CNBC, Iger said Disney is searching for a strategic partner for ESPN as the network works towards a transition into streaming. He added that the partner could bring valuable distribution or content to ESPN. 

Iger also did not rule out the idea of potentially selling a stake in the business. Disney currently owns 80% of ESPN, while media company Hearst owns the remaining 20%.

"Our position in sports is very unique and we want to stay in that business," Iger told CNBC. "We’re going to be open-minded about looking for strategic partners that could either help us with distribution or content. I’m not going to get too detailed about it, but we’re bullish about sports as a media property."

In theory, a jointly owned subscription streaming service among multiple major professional sports leagues could give consumers access to unprecedented packages of games.

ESPN's business model has primarily relied on cable subscribers, but Disney seems to want to pivot as traditional cable subscriptions continue to decline nationwide. Live sporting events still typically yield strong ratings for ESPN, which could be one of the reasons behind the pursuit of a possible partnership with the leagues.

However, the NFL, MLB and NBA make a significant amount of revenue from the media rights deals with their respective media partners.

It also remains unclear how Disney's competitors would react if the leagues did purchase a minority stake in ESPN. 

Over the years, media companies have routinely engaged in bidding wars to land the rights to one of the major American sports leagues. If a league makes a deal with ESPN, that could mitigate future bidding wars.

Since ESPN already has a business relationship with the leagues, the company could put measures in place to make sure the journalists covering the leagues remain as objective as possible.

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Last month, several well-known on-air personalities left ESPN as a part of Disney's latest rounds of layoffs. 

Among those let go were Max Kellerman, Keyshawn Johnson, Jeff Van Gundy, Jalen Rose and LaPhonso Ellis, Fox News Digital previously confirmed. Suzy Kolber, who had been at the network for 27 years, also announced she had been laid off.

"Today I join the many hard-working colleagues who have been laid off," Kolber tweeted June 30. "Heartbreaking - but 27 years at ESPN was a good run." 

The cuts were part of Disney's multibillion-dollar cost-cutting initiative aimed at streamlining the organization's operations.