Nearly two months later, after an unexpected leadership change at the Walt Disney Company, the sports broadcasting giant is no closer to announcing a deal with a prominent sportsbook. Speaking at a Manhattan conference on Wednesday, Jimmy Pitaro, ESPN and sports content chairman, confirmed that a potential deal with a sportsbook operator is “not imminent.”
Pitaro delivered the comments on Wednesday morning before heading to a Disney board meeting. The meeting is the first for the parent company of ESPN since Disney CEO Bob Iger rejoined the company this month. Iger returned to his old post in late November in conjunction with the departure of Bob Chapek.
— Sports Business Journal (@SBJ) November 30, 2022
During the 30-minute panel appearance, Pitaro emphasized that ESPN has held discussions with several major sportsbooks, but he did not disclose any by name. He also did not answer if ESPN was close to inking a partnership with DraftKings, under which the sportsbook operator potentially could gain exclusive rights to the network’s sports betting brand.
For now, it appears that Iger will play an instrumental role in the question of whether ESPN moves forward with a comprehensive sports betting expansion plan.
“Bob’s ultimately going to have to dig in with me,” Pitaro said at the Sports Business Journal Media Innovators conference. “We’re going to have to sit down and I’m going to have to walk him through this.
“He doesn’t just look through the ESPN lens, he looks through the Walt Disney Company lens.”
Pitaro reiterated Wednesday that ESPN will not assume any risk by creating lines for betting on a sporting event. If ESPN enters the sports betting space, it will do so through a third-party deal with a sportsbook.
A ‘full plate’ for Iger beyond ESPN
Pitaro, who became the president of ESPN in March 2018 and in 2020 received the chairman title, has a longstanding relationship with Iger dating back to the Disney leader’s first stint running the company. While Pitaro noted that the two spoke over the phone on Tuesday evening, he did not indicate if they discussed the implications of a potential sports betting partnership. Iger succeeded Michael Isner as Disney CEO in 2005, remaining in the position until December 2021.
Quite often, the conversations between Pitaro and Iger extend beyond business matters to sports, the ESPN chairman noted, since both executives are ardent sports fans. On Tuesday, for instance, Pitaro said the two discussed USC’s ascent to No. 4 in the College Football Playoff rankings, a move that could result in the program’s first appearance in the CFP national semifinals. The unveiling of the rankings by ESPN on Tuesday night delighted Iger, who is married to Willow Bay, the dean of the USC Annenberg School of Journalism.
“He has great sports instincts, he really understands this industry,” Pitaro said. “Bob is one of the most passionate sports fans I know.”
SBJ Media is all about Bob Iger tonight.
* When will ESPN go DTC?
* Will Disney spin off ESPN?
* What does this mean for ESPN and the NBA?
* What does this mean for ESPN and gambling?
* How does this affect Jimmy Pitaro?https://t.co/cesFOXe1MC
— John Ourand (@Ourand_SBJ) November 21, 2022
Still, Pitaro would like to give Iger “some time to breathe” before making a major decision on the direction of ESPN. Any decisions on whether Disney could spin off ESPN will be left to Iger, Pitaro emphasized.
“I need to give him some time. He has a lot on his plate, not just with ESPN, but with all aspects of the Walt Disney Company,” Pitaro said. “I’m excited to have another opportunity to work with him.”
When ESPN initially signaled intentions to enter the sports betting space in Aug. 2021, the network reportedly sought a deal that would fetch around $3 billion from a sportsbook partner. Over the last year, the market has corrected as stocks across the industry have plunged upwards of 70%. Still, there are indications that ESPN may seek approximately $300 million a year for a sports betting deal, according to gaming firm Eilers & Krejcik Gaming.
Intersection with streaming
The conversation transpired on the same day that Disney revealed in a regulatory filing that Iger “will initiate organizational and operational changes” throughout the company that could result in a new distribution approach within its business platforms.
As of Oct. 1, ESPN+ had 24.3 million paid subscribers, the company disclosed in an annual report with the U.S. Securities and Exchange Commission, an increase of 42% from the previous year. ESPN+, the company’s direct-to-consumer video streaming service, offers programming on select lower tier sports, but it does not carry major live events such as Monday Night Football. During fiscal year 2022, a metric known as “average monthly revenue per paid subscriber” rose modestly to $4.80, up from $4.57 the prior year.
Disney is expected to closely monitor changes in consumer behavior from a direct-to-consumer perspective, as its streaming platforms struggle to turn a profit. Last year, Disney’s online platforms and streaming services lost approximately $4.01 billion, with ESPN+ incurring more than $1.5 billion in programming and production costs, according to the filing.
Kicked this around last week.
No one had a convincing catalyst for it to happen.
ESPN still makes money and Iger understands better than anyone the value in sports rights. https://t.co/9VtXAvP6Mp
— JohnWallStreet (@HowieLongShort) November 30, 2022
In addition, Disney purchased the final 15% stake in BAMTech from MLB in November for $900 million, the company noted in the filing. The purchase values BAMTech, a streaming technology provider, at $6 billion, a 40% increase over the last 15 months. Disney purchased its first stake in BAMTech in 2016, before spending $1.58 billion a year later to increase its ownership stake to 75% of the asset.
Ultimately, a comprehensive sports betting platform could provide another mechanism for ESPN to engage with its streaming audience. ESPN+ is part of the Disney bundle, along with other popular streaming services such as Disney+ and Hulu. Live sports is the “single best way to aggregate live audiences” and drive a new platform, Pitaro said on Wednesday’s panel.
When asked by Sports Handle on Wednesday about the role sports betting could play in engaging streaming customers, Pitaro declined comment. ESPN did not make Pitaro available to reporters following his appearance, citing the timing of the board meeting.
Separately, Pitaro noted that ESPN is not currently engaged with the NFL in negotiations on the league’s new Sunday NFL Ticket package. Over the summer, NFL Commissioner Roger Goodell indicated that the league targeted this fall for completing a deal on the rights package.
The NFL is reportedly seeking more than $2 billion annually from the deal. Since Goodell’s comments, speculation has mounted that the league could award the bid to a major tech company such as Apple, Amazon, or Meta.
Although Pitaro did not set a timetable for when a deal could be reached with a sportsbook operator, he reiterated that there is an upside in adopting sports betting as part of ESPN’s business.