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Fri, August 11, 2023

Disney wants sports leagues to become partners in ESPN, but leagues aren’t convinced

Disney wants sports leagues to become partners in ESPN, but leagues aren’t convinced

Disney wants the four major US sports leagues to each have a stake in ESPN, but the leagues aren’t convinced by the plan.

Disney+ continues to lose money so the company is looking at ways in which they can save money, with $512 million lost in its most recent quarter. One way Disney hopes to save money is by having the leagues each have a stake in ESPN so that is does not have to pay out billions of dollars each season in broadcasting right as the leagues’ equity would replace this. 

Whilst Disney plans to utilise ESPN as a vessel for saving money the leagues are not yet convinced by the proposal given many teams pay their players in large part from the broadcasting rights fees. ESPN’s bids serve an essential role in how the leagues earn money. The organizations can generate competitive bids for packages of games because ESPN is almost always a potential buyer.

Disney has also moved into the US sports betting industry, tying its ESPN cable network to the casino and online gambling company Penn Entertainment in a $2bn deal. This deal is part of a wave of moves that Disney has made as it struggles to find its space in streaming.

The company has announced on Tuesday that PENN Entertainment will rebrand its current sportsbook and relaunch as ESPN BET, effective this autumn in the 16 legalized betting states where PENN Entertainment is licensed.

Sports betting is a relatively young industry in the US, in effect launching after a 2018 US Supreme Court ruling struck down a federal ban. Since then, 34 states and the District of Columbia have legalised the practice, according to the American Gaming Association, a trade group.

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