Breaking: ESPN Has Reportedly Talked to MLB, NBA, NFL About Becoming Minority Investors in Sports Broadcasting Network

Despite dwindling linear ratings, live sports are still the most bankable draw in broadcasting. This is why in an era of declining network profits, sports media rights continue to draw mind-bogglingly pricey deals from broadcast, cable, and streaming outlets. However, one way to save money on those rights would be for media entities to take on major professional sports leagues as investors. That is reportedly what Disney is considering for ESPN following CEO Bob Iger’s declaration last week that he is looking for “strategic partners” to move the network into its next phase.

According to CNBC’s Alex Sherman, Iger and ESPN chairman Jimmy Pitaro have had preliminary discussions with Major League Baseball, the NBA, and the NFL about potentially acquiring part of the worldwide leader in sports. The conversations revolved around a variety of potential partnerships and investments. While no further details on the discussions were revealed, presumably, the investment would decrease the amount that Disney would have to pay in order to air games from the leagues, making it more financially feasible for ESPN to continue being broadcasting’s premier home for sports.

For over a year — even before Iger returned to the top of Disney — it was clear that the company was interested in eventually launching an all-encompassing, standalone streaming version of ESPN. The presumption has always been that this eventuality was still a ways down the road because of the shrinking, but still substantial revenue that Disney generates by charging cable and satellite company’s the largest carriage fees in the industry. However, in May, it was reported that Disney had begun negotiations with traditional TV providers to adjust their carriage agreements, seemingly indicating that this possibility was far closer to happening than had previously been supposed.

In a tweet following up his scoop, Sherman shed some light on to why these types of discussions could be happening now. In the second quarter of the year, for the first time, increases in affiliate fees paid to Disney by cable and satellite companies were not enough to cover losses due to cord-cutting. This means that despite the fact that the total amount per subscriber that TV providers have to pay Disney in order to carry their channels went up, it did not increase enough to account for all of the people who left the traditional TV ecosystem. Therefore, Disney’s revenue in this sector of its business declined for the first time; it was still profitable, but the company is clearly looking for ways to retain as much income as possible. So, diversifying by expanding its streaming reach could be the next logical step.

Last year, it was reported that Netflix was looking to purchase small, niche sports leagues as a way to get into live sports broadcasting, without having to commit to the hundreds of millions — or in some cases billions — of dollars to do so on a larger scale. While certainly not the same as allowing the NBA and NFL to buy part of its business, Netflix’s strategy is similar.

One of the most plugged-in analysts in the media industry recently hypothesized that Comcast could be interested in purchasing a portion of ESPN as a way to ensure additional sports rights — most notably the NBA — and to cross-promote programming to the millions of sports fans that regularly tune in to watch games, matches, news, and analysis on the country’s most popular sports network. The NBA’s current media partners, Disney and Warner Bros. Discovery, currently have an exclusive negotiating window with the league until 2024, but NBC has made no secret that it would like to get back into the NBA broadcasting game.

The possibilities of how partnerships between ESPN and major sports leagues would work are endless; everything from ESPN getting a discount on rights fees to special packages like MLB.TV, NFL Sunday Ticket, or NBA League Pass being available as part of ESPN+ to prominent athletes showing up on ABC series and in Disney+ movies. However, it would also likely raise monopolistic concerns about ESPN’s place in the sports media landscape, as well as whether or not the network could maintain journalistic integrity when covering the darker aspects of their partner leagues.

Whether or not Disney does end up partnering with the MLB, NBA, and/or NFL in an effort to solidify ESPN’s future, there is no doubt that Iger, Pitaro, and company are looking to get creative when it comes to the long-term financial health of the brand.