Profit at Walt Disney Co.’s sports TV networks fell 20% through the first nine months of fiscal 2023, as the company provided the first peek at that business on a standalone basis.
Earnings at the sports-media unit, which includes the flagship ESPN network and related channels, fell to $1.48 billion in the nine months ended July 1, Disney said in a filing Wednesday. Sales declined 1.3% to $13.2 billion.
The Burbank, California-based entertainment giant released separate results for the sports division as management seeks a strategic partner for the business. The numbers indicate a still very profitable operation, even amid the growing challenges of a weaker TV advertising market and subscribers canceling cable TV in favor of streaming services like Netflix Inc.
The sports unit generated operating income of $2.71 billion on sales of $17.3 billion in the previous fiscal year, the company said.
The results could help Disney attract outside investors, Bloomberg Intelligence analyst Geetha Ranganathan said in a research note. The business could be worth as much as $22 billion, she said, based on the newly released numbers.
In this year’s third quarter, the division posted profit of $854 million on sales of $4.3 billion. More than half of that revenue, or $2.6 billion, came from cable and satellite TV subscribers. Some $1.15 billion was from advertising.
The numbers included results for the ESPN+ streaming service, as well as for the Star sports channels in India. The Star channels lost $444 million through nine months of this fiscal year, while the domestic ESPN channels earned $1.89 billion. Disney won the traditional broadcast TV rights for the Indian Premier League cricket tournament in a bidding war last year. More recently, the company has been looking to sell its Indian TV business.
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Disney acquired ESPN through the purchase of Capital Cities/ABC in 1996. At the time, it was an afterthought to the ABC network, but the business, with its twin revenue streams from advertising and cable subscriber fees, became a huge source of profit.
ESPN, like other traditional TV channels, has been challenged by subscribers canceling their cable subscriptions and the need to continue to invest in ever more expensive sports rights.
(Updates with analyst’s comment in fifth paragraph.)
