Disney, under the leadership of CEO Bob Iger, is planning to make a significant restructuring move by separating its ESPN sports network from the rest of its entertainment segment. The new Sports division has proven to be a lucrative venture, with $13.2 billion in revenue and nearly $1.5 billion in operating income for the first nine months of fiscal 2023. In comparison, the entire Entertainment segment, excluding sports, only recorded $1.2 billion in profits.
Starting with its upcoming earnings report, Disney will be showcasing three distinct divisions: Sports, Entertainment, and Experiences. This decision to break out ESPN from the entertainment pack marks one of Iger’s most significant moves since resuming his position as CEO of Disney a year ago.
ESPN’s revenue primarily comes from affiliate fees, which exceeded $8 billion. Advertising brought in an additional $3.2 billion, followed by subscription fees that amounted to $1.1 billion. In fiscal 2022, ESPN’s sports revenue reached an impressive $17.3 billion, with an operating profit of $2.7 billion. The previous year, it was around $16 billion in revenue and $2.7 billion in profit.
The Sports segment includes not only ESPN but also its eight ESPN branded television channels, ESPN on ABC, the ESPN+ direct-to-consumer video streaming service, and international sports channels. However, Star India, a part of the Sports segment, has contributed $637 million in revenue while incurring a significant operating loss of $444 million in the first nine months of 2023.
On the other hand, the Experiences division, formerly known as Disney Parks, Experiences & Products, has generated $24.4 billion in revenue and an impressive $7.2 billion in operating profit for the nine-month period. It is worth noting that the division will no longer include royalties on merchandise licensing revenues from intellectual property (IP) created by the entertainment segment.
By separating ESPN into its own business segment, Disney aims to better showcase the booming success of its Sports division. With its strong financial performance, ESPN has proven to be a valuable asset for the entertainment giant. This strategic move is expected to provide investors and stakeholders with a clearer understanding of Disney’s diverse and profitable ventures in the sports and entertainment industries.
As Disney prepares to release its upcoming earnings report, all eyes will be on the performance of each division: Sports, Entertainment, and Experiences. The company’s decision to restructure and highlight these divisions individually signals a new era of transparency and accountability for the entertainment giant.
