Shares of Disney jumped as much as 3 percent Friday after a report said the company was considering a spinoff of its ESPN sports networks.
But shares of the Mouse Houses gave back some of their gains, closing the day up only 1.2 percent, after a person familiar with the matter denied the report.
The initial story published by Puck News said Disney CEO Bob Chapek had tapped some of his closest deputies to explore a separation of the sports channels from the rest of the company.
One unnamed source is reported as having told the publication that “there are now conversations happening regularly at Disney about whether or not to spin off ESPN.” But an anonymous person close to the company told CNBC that the story wasn’t accurate.
CNBC anchor Julia Boorstin told viewers that a source “close to the situation” said the report is “inaccurate.” The source said that Disney is “focused on building the value of ESPN+ for its digital bundle, and that it is also pursuing sports betting for ESPN and ESPN+
Disney did not return requests for comment.
Disney has been vocal about its views on the importance of streaming to the company. When it launched Disney+ in 2019, the company revealed it would offer a bundle that would include sibling streaming services Hulu and ESPN+ — a move that would help it take on streaming giant Netflix. The bundle, which currently costs $13.99 a month with ads is the same price as Netflix’s standard plan.
In order to beef up its movie and TV show offering, Disney reorganized its entertainment operations last year. The move allowed programming divisions, like the film and TV studios, to focus their efforts on feeding the streaming services, not just movie theaters and TV networks. The company has also invested more heavily in ESPN+ recently to pump up its original series and other shows.
But most of Disney’s growth has occurred at Disney+, which has roughly 116 million subscribers, according to the company’s third-quarter earnings report. Hulu notched just under 43 million and ESPN garnered just under 15 million.
For Disney, part of the reason why ESPN’s growth has been so slow is because most of its viewers watch it on TV. In fact, Disney requires pay-TV providers to include ESPN as part of their most popular cable packages, and avid sports fans are paying top dollar.
Despite an acceleration in cord-cutting– research firm eMarketer said more than 6 million people ditched cable last year — the traditional TV model is still a lucrative business.
Media watchers have wondered whether ESPN still makes sense as Disney pushed forward into streaming, leading to chatter of a spinoff.
For now at least, it appears Disney will keep the marriage going.
“We’re successfully navigating the evolution of consumer choice,” Jimmy Pitaro, chairman of ESPN told CNBC in April. “We believe we can be multiple things at the same time. As consumers continue to gravitate toward direct to consumer, we have the optionality that we need.”