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Have a continuity issue between representations of a popular media franchise that’s currently limiting production of even more content to glean the maximum amount of money from said franchise? There’s a simple solution for that which producers have employed ad nauseam over the past decade; the all-powerful multiverse.
One such production studio, Disney, is caught in a multiverse of its own currently amid a universe of speculation about its fate given ever-increasing priority on streaming content, devaluation of linear broadcasting and shareholders who insist that because they wished upon star, their wild profit dreams should come true.
While that might not seem to have a direct correlation with Disney holding ESPN’s latest content/licensing deal with Penn Entertainment, there are so many possibilities in the multiverse. It’s almost a multiverse of madness.
Penn enters at interesting time for ESPN
When Penn Entertainment announced its partnership with ESPN, it did so with robust confidence that this deal will provide some Disney magic. Penn wants its ESPN Bet Sportsbook to ideally represent a 15%-20% share of the US online sports betting market.
That would represent at least a tripling of Penn’s current share of the market. Doubts remain about whether that is possible. Only time will tell. In the meantime, other things are brewing within Disney and ESPN.
In July, Alex Sherman and Lillian Rizzo featured an interview of Disney CEO Bob Iger for CNBC. Iger confirmed that Disney has been seeking a new partner for ESPN. Currently, Disney controls 80% of ESPN.
In addition, Iger said, Disney is open to selling off its broadcast and cable networks. Those include ABC, FX, Freeform, and, yes, you guessed it, ESPN. Another alternative is spinning such holdings off into their own company or companies.
Iger reaffirmed these possibilities on the company’s recent earnings call according to Rick Porter of The Hollywood Reporter. The motivation for these considerations? The same as any other business; profits.
ESPN’s cash cow days are sunsetting
Many current Disney fans may not be too familiar with Clarabelle Cow despite its place in the lexicon of Disney animation characters. In the same way, ESPN’s days as a cash cow for Disney seem to be fading.
When Disney consumed all these properties like Monstro swallowing Pinocchio’s raft, revenues from broadcast and cable television program were greater than they are now. Those holdings only figure to further decline in value as time passes, too.
Unloading these properties would free Disney to focus on its streaming products. Adding more premium content to Disney+, for example, would allow Disney to charge more for the service. Having split loyalties currently incentivizes Disney to prioritize broadcast and cable for such content.
Iger’s comments have spun a web of speculation that Spider-Man would be envious of. That includes the discussion of Apple buying Disney that refuses to go away like the “Indiana Jones” film franchise. The fuel behind the speculation is that Disney unloading components equates to right-sizing for a sale.
The multiverse could bring a Disney divestiture of ESPN at some point. Whether that would be a simple spin-off into its own company again, a joint venture with ABC and the like, or an outright sale, Penn Entertainment would probably have some interest in such a move.
How would a Disney exit affect ESPN Bet?
If Disney decides to end its operation of ESPN like Steve Rogers Captain America choosing to live on a different timeline, that creates an entire new universe of possibilities for ESPN Bet. Much of the impact will depend on what Disney’s exit looks like.
If ESPN becomes its own entity again or becomes part of a Disney-created but not entangled entity, there could be little impact on ESPN Bet. This might be part of the reason why Penn built an early exit clause into its contract with ESPN, though.
Penn has the option to cancel the deal after three years. If Disney does divest and Penn doesn’t like the writing on the wall, it might exercise that clause. Perhaps the greatest wild card might be ESPN finding a new majority owner.
A buyer for ESPN would probably evaluate every aspect of the business to determine their value in relation to the direction that it wants to take ESPN. The partnership with Penn would likely be part of that review.
That doesn’t necessarily mean Penn’s deal would be in jeopardy. There’s actually a universe in which new majority control might be a good thing for Penn.
Disney’s fade might actually behoove ESPN Bet
While most of the success of ESPN Bet will depend on Penn’s ability to deliver a good product to bettors, it also partially relies on ESPN’s commitment. That applies more in the daily operations than the overall corporate strategy.
If ESPN is regularly crafting content around ESPN Bet, the value of the product is likely to be greater. A company that takes Disney’s place might have more motivation to do so than Disney. To be clear, ESPN is not currently shying away from creating sports betting-focused content. That’s far from the case.
However, promoting gambling and running a theme park for children aren’t necessarily the best bedfellows. Furthermore, as Disney continues to sour on ESPN as a revenue-generator, it’s less likely to devote more resources to it.
A new owner may not have such reservations, especially following spending whatever it would cost to acquire ESPN. At this time, ESPN getting kicked out of the House of Mouse remains a mere possibility.
Should that occur, though, ESPN Bet will be along for the ride to wherever the next destination would be. It could be akin to Mr. Toad’s Wild Ride for Penn.
