NEW YORK: The National Football League ( L) will sell most of its media businesses to Walt Disney Co in exchange for a 10% stake in the ESPN sports networks, deepening the ties between the league and one of its top broadcast partners.
The assets include L RedZone channel, which is a highlights service, and the L Network cable channel, according to a statement. Disney will also get to air more L games.
Neither Disney nor ESPN disclosed the financial terms of the agreement, but industry analysts estimated the value at US$2bil to US$3bil.
The lines between sports leagues and their media partners have been blurring lately. In June, ESPN bought a stake in a lacrosse league in a deal that also includes media rights.
Last week, Fox Corp bought a one-third stake in Penske Entertainment, which owns the IndyCar Series racing circuit and the Indianapolis Motor Speedway.
As part of the accord, ESPN will own the cable and digital rights to L Network and rights to the RedZone brand. L Fantasy Football will be merged with ESPN Fantasy Football.
ESPN’s platforms will also licence an additional three L games per season to air on L Network, while an additional four ESPN games will shift to the L Network.
The L will keep L Films, the L+ subscription service, L.com, the L Podcast Network, the L FAST Channel and the official sites for the league’s 32 clubs. It will also continue to own, operate and produce L RedZone, and retain the rights to distribute L RedZone digitally.
On Wednesday, ESPN also detailed an expanded content agreement with the L, including an extension of the L Draft rights.
The deals come as ESPN prepares to launch a new streaming service. Simply called ESPN, it will cost US$30 a month and give sports fans access to all of the company’s traditional TV channels.
Disney will also offer the new ESPN as part of a bundle with Hulu and Disney+ for US$36 a month, with a promotional price of US$30 monthly for the first year.
Customers who already get ESPN through a cable or satellite-TV subscription will get the streaming version at no additional cost.
ESPN is jointly owned by Disney, with an 80% stake, and Hearst Communications Inc, which holds 20%. With the L agreement, Disney’s share will drop to 72% and Hearst’s to 18%. The deal is expected to close next year.
Early Wednesday, Disney reported fiscal third-quarter earnings that beat Wall Street estimates. The shares fell after the company’s full-year profit forecast fell short of some investors’ expectations. The stock was down 3.7% to US$113.97 at 11.30am in New York.
Alongside the Disney deal, the L is also putting together a few games for a new media package that it could sell to potential streaming partners, according to people familiar with the league’s plans.
The league has secured four games that currently air on the L Network, and the games could be sold to a new streaming buyer, such as Apple Inc, or add to the lineup of newer partners like Netflix Inc and Alphabet Inc’s YouTube. — Bloomberg
