Comcast President Shoots Down Possibility of ESPN Deal With Disney

Comcast president Mike Cavanagh poured cold water on speculation that the media and cable conglomerate might ink a deal with Disney to take a piece of ESPN.

“I’ve been asked about and read some speculation that in some way we might be interested in swapping businesses [with Disney]… in the sports space,” he said on Comcast’s Q2 earnings call. “And I would just say that that’s very improbable,” given “tremendous issues” around taxes and minority shareholder deal structures. “So I would put aside the idea that there’s… anything inorganic, you know, that is likely to happen around ESPN in particular, which is what we’ve been asked about,” Cavanagh said.

Cavanagh’s comments come after Disney chief Bob Iger said in a July 13 interview with CNBC that the Mouse House was looking for a strategic partner for ESPN. Subsequently CNBC reported that Disney has had talks with the NFL, NBA and MLB about becoming minority investors in ESPN.

Bank of America Securities analyst Jessica Reif Ehrlich had suggested that Comcast would be a likely partner for ESPN. Iger’s comments about seeking a strategic investment partner for ESPN “just screams one company — and that company is Comcast,” Reif Ehrlich said on the July 19 episode of “The Marchand and Ourand Sports Media Podcast.”

On the call, Cavanagh touted NBCUniversal’s own sports business and Peacock’s lineup of live sports. “I think we’ve got one of the best portfolios in sports,” he said, citing NFL Sunday Night Football, Big 10 football, NASCAR, WWE, Olympics and PGA rights. “So obviously, it makes us a really strong partner to leagues and around the world. We’re known for that,” the exec said.

Meanwhile, Comcast and Disney are in the midst of haggling over the terms of Comcast’s expected sale of its Hulu stake to the Mouse House. The future of Hulu was not broached on the Comcast Q2 earnings call.

Comcast currently holds a 33% stake in Hulu, with Disney owning the remainder. Starting in January 2024, Disney can require Comcast to sell its stake in Hulu (and, conversely, Comcast can force the sale). Under the terms of the Disney-Comcast deal for Hulu, the “guaranteed floor value” of Hulu is $27.5 billion, meaning Comcast’s stake is worth a minimum of about $9.2 billion — but Comcast is angling to get a bigger check. “I think it’s more likely than not” that Comcast will end up selling full control of Hulu to Disney, Roberts said at an investor conference in May. “I’m pretty certain if and when we sell our Hulu stake, it will be for more than what we have in it.”

In the CNBC interview, Iger said he had determined the company is “better off having Hulu.” He had previously announced that Disney+ and Hulu content will be combined into a single app before the end of 2023 for subscribers of both streaming services. Iger, who renewed his contract to serve as Disney’s CEO through the end of 2026, also said in the CNBC interview that Disney’s linear TV assets including ABC and FX “may not be core” to its business, hinting the company may seek to sell or spin out the networks.

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