Should Disney Bundle ESPN+ With Netflix? One Investor Thinks So

Disney just can’t seem to satisfy activist investor Nelson Peltz. Earlier this month, the billionaire launched yet another proxy fight against Disney seeking to get two representatives from his Trian Fund Management LP (himself included) onto Disney’s board. Peltz wants a larger voice in making sure that his ideas on what Disney can do to improve its financial fortunes are put into action. Peltz’s latest idea? Bundle ESPN+ with Netflix.

• This marks the second attempt by Peltz to force his views on Disney in a year.
• Netflix signed its first major sports entertainment deal with the WWE in January.
• Bundling ESPN+ with Netflix could jeopardize Disney’s plans for an expanded ESPN streaming service.

Pelted With Suggestions

Peltz has launched his second proxy battle against Disney in the last year because he argues that company CEO Bob Iger is not being transparent enough with his plans to improve Disney’s balance sheet. Peltz has a few ideas of his own, Bloomberg reports that the latest of these is to have Disney sell ESPN+ and its attendant live sports rights to Netflix or another sports-hungry outlet.

Disney defeated Peltz’s attempts to get representation on its board early in 2023; at that time, Peltz was upset about the slow pace at which Disney’s acquisition of Comcast’s 33% stake in Hulu was progressing. He suggested that Disney needed to make the move immediately or get out of streaming altogether, instead of continuing to hemorrhage money from that segment of the company. Disney and Comcast officially moved forward with the transaction on Nov. 1, 2023.

Should Disney Bundle ESPN+ with Netflix or Not?

On the one hand, bundling ESPN+ with Netflix could be a potentially incredible outcome for both companies. Disney would get access to the 80.13 million streaming customers in the United States and Canada that Netflix recently reported having, and Netflix would be able to package itself with a streamer that has access to “Monday Night Football” and thousands of other live events without having to pay to acquire those rights for itself.

Such a proposal raises immediate questions, however. First among these is whether Netflix would even be interested in such a bundle. For one thing, it would mean giving a hand up to its largest streaming competitor in terms of publicly reported subscriber numbers; at last count, Disney had over 224 million global streaming customers, not accounting for Disney Bundle redundancies.

Netflix has also been adding live sports to its portfolio slowly and deliberately. The streamer aired its first live sporting event ever in the form of a live golf tournament in November, and just last week announced a deal to air episodes of the WWE’s “Raw” live each week starting in 2025. It may not feel ready to associate itself so closely with a sports streaming platform, even if that’s just through a soft bundle with ESPN+.

From Disney’s point of view, bundling ESPN+ with Netflix could make it more difficult to launch an ESPN streamer that will (presumably) have all content from ESPN’s linear channels. Disney has been seeking partners to help it do just that by 2025, but would that streamer be able to import all sports from ESPN+ if that service were bundled with Netflix? Even if it did, would Disney see value in offering such a bundle that might pull subscribers away from its new ESPN streaming platform? Would ESPN+ even continue to exist if a new ESPN direct-to-consumer (DTC) platform comes to market? Of course, the future standalone ESPN streamer could be the one bundled with Netflix, meaning that there would be even more incentive for the world’s largest streamer to partner with Disney.

There are lots of questions raised by Peltz’s suggestion that Netflix and ESPN+ bundle together, though the proposal seems fundamentally sound. Even if Disney staves off another Peltz proxy fight it should look into his idea, as it could help itself and Netflix by bundling that company’s streaming platform with ESPN+, even for a short time while Disney readies a more complete ESPN streaming product for launch.