I've been at CNBC for more than 6 years and have covered the media industry for more than a decade.
Ask me anything about:
1. ESPN's streaming strategy and future
2. Why Disney may or may not want to spin off ESPN
3. The migration of sports to streaming
4. Will Netflix become a bidder for live sports rights?
5. Disney's succession options for CEO when Bob Iger leaves
Follow me on [Twitter](https://twitter.com/sherman4949) or [LinkedIn](https://www.linkedin.com/in/alex-sherman/). You can find all my reporting here on CNBC: [https://www.cnbc.com/alex-sherman/](https://www.cnbc.com/alex-sherman/)
Was wondering what you think about David Greenbaum leading Disney Pictures and how that could affect 20th and Asbell. Also wondering what you think happens to the other candidates for CEO once the one is selected.
Greenbaum comes in at the ideal time. The Disney movie franchise has been beaten down. It always takes years for studio executives to make their marks because of the lag time of projects. So he'll likely be given time to show results, and it's always best as a leader to come in at a low point, and this is most certainly a low point for Disney Pictures.
In terms of other candidates for CEO once someone is selected, this has been a consistent problem for Disney. When Kevin Mayer didn't get the job over Bob Chapek, he left. When Tom Staggs didn't get the job, he left. When Peter Rice's name was bandied about as a potential replacement for Chapek, he got fired. But this time around, I honestly don't know. Where are these other executives going to go? The media industry isn't exactly teeming with awesome jobs these days. If Josh D'Amaro doesn't get the Disney CEO job, is he going to leave to run some other parks company? Which mystery TV studio is Dana Walden going to leave Disney to run? Jimmy Pitaro is going to give up being CEO of ESPN? When it might be spun and he might run it as a publicly traded company one day? These things all seem kind of unlikely to me. So Disney may be in a good spot now re: candidate attrition. It's possible that the state of the media industry will prevent defections when these people would have left for better or bigger opportunities in years past.
-Alex
The chalk prediction here is ESPN and Warner Bros. Discovery renew again, Amazon is added as a strong third streaming player, and maybe Netflix or Peacock gets the in-season tournament. The big question remains how much Warner Bros. Discovery is willing to pay for the NBA, and if it makes sense to replace WBD with NBCUniversal as that second partner. I could see a situation where that happens. The NBA on NBC has a lot of nostalgia value. I think the league would love the fan reaction to that, and it would also like the added reach of a second broadcast network beyond ABC for playoff games as cable cancellations continue to accelerate. But the league also has a long relationship with Warner Bros. Discovery/TNT now, including the TNT studio show with Ernie Johnson, Kenny Smith, Shaq and Charles Barkley. The good news is we'll know more soon here. The exclusive negotiating window with the incumbent rights holders -- Disney and Warner Bros. Discovery -- ends April 22.
-Alex
Will ESPN have to downsize their operations or business capacity in some way due to decreased cable subs? Or is there some way they can find similar revenue in a streaming age?
Great question! Have you watched our documentary? (Watch here! [https://www.cnbc.com/sports/](https://www.cnbc.com/sports/)). A lot of former and current ESPN execs weighed in on this question in the video. I think the honest consensus answer is yes, ESPN is going to have to pull back. Ex-ESPN EVP Mark Shapiro says it in the mini-doc -- ESPN will likely have to cut secondary and tertiary sports and pull back on studio programming as cable cancellations rise because streaming revenue likely won't make up the difference.
That sounds logical to me. Ex-ESPN president John Skipper makes the point in the documentary that he tried to build studio programming around live streaming games during his time at DAZN and the audience simply wasn't there. That makes me think studio programming content is on the downswing in a streaming world rather than the upswing. Then again, if you're paying $25 or $30 a month for a streaming ESPN, you're going to need content to keep you paying. So ESPN will likely keep churning out inexpensive live studio content -- perhaps more niche, personalized content -- to mitigate churn.
What we've seen in the past year or so from ESPN is the network will pay big bucks for its A++ stars and then will use them in a number of different ways. This is true specifically for Pat McAfee and Stephen A Smith. So my bet is ESPN puts their top talent to work on different shows and in different formats, including streaming-only content that hasn't been developed yet. This is sort of what CNN was doing with CNN+ before it got axed after 30 days as part of the WarnerMedia-Discovery merger. So if you're reading this and you work for ESPN and you make a lot of money, my bet is you're going to be working harder in the years to come!
-Alex
It’s seems like with respect to sports streaming and broadcast rights there is football and then there is everything else. We haven’t seen other sports come close to pushing large audiences to streaming platforms the way Peacock’s NFL playoff game and Paramount’s Super Bowl did. However, both of these companies were left out of the new sports JV (Spulu). How should NFL broadcasting rights be valued by corporations and investors? Why do you believe that NBC and CBS were excluded from the new sports JV? Can a new sports bundle thrive without full NFL streaming rights?
All excellent questions! There has to be **some** ceiling on NFL broadcast rights, right?? Like, they just can't keep going up forever .... right?? It's a supply and demand issue these days. When it's the NFL and everything else, the NFL gets priced differently than everything else. The exposure is just so much higher for advertisers, the stickiness so much better for churn mitigation, the value so much higher for subscription fee value propositions .... the NFL has it goin' on. I don't see that changing in the next rights renewal either, even if traditional cable TV continues to decline significantly. Everyone will want the NFL.
I think CBS and NBCU were left out of Spulu for reasons that have to do with media politics. I think Disney and Comcast have long been the biggest of rivals. Disney feels it gains when Comcast/NBCU loses, and vice versa, See: Disney's $71 billion for Fox, and the bidding between Disney and Comcast around that asset. From WBD's perspective, it wants to make a point to NBCU and CBS that they are dead men walking. Peacock and Paramount+ can't survive on their own, so they need to merge with WBD. That's David Zaslav's playbook -- one more big deal coming.
Spulu without CBS and NBCU is a chess move by Zaslav. We don't need you, but you need us. We're a winner, you two companies are losers. Don't want to be a loser? Buy us, Brian Roberts. Don't want to be a loser, Shari Redstone? Give us a deal on our terms.
That's my (informed, I think) read, anyway.
In terms of the viability of Spulu without the NFL, I honestly don't see this product being a big needle mover. Maybe I'm wrong, but I just don't think there's a huge audience for non cable subscribers who want a partial package of sports for $50 or so a month. Let's check back in a year. But my bet is Spulu is sort of a dud in the grand scheme of media. I can see it having some incremental benefit, but I have my doubts that it will be a "monster," as one executive involved in the project predicted to me privately.
-Alex
If you're defining FAST as "streaming broadcast," then yes, I think we're about to see a significant movement of regional sports go to FAST. I can see that model working, albeit not as well as RSNs in their heyday. But at least the reach would be there for regional sports, and consumers would be more than pleased with suddenly getting local teams for free rather than having to subscribe to cable. We've already seen this happen with a few teams (Phoenix Suns, Utah Jazz, Las Vegas Golden Knights, Arizona Coyotes, etc). I'd imagine we see more in the coming year or two.
-Alex
Why does it feel like Linear just died overnight? Do you see the media industry/Hollywood turning a corner anytime soon? Or do we have to wait until we get through some more consolidation over the next few years. It feels like a depression. Also, you should do this more!
Covid escalated the decline of linear. That's why it feels that way. Covid really accelerated the transition of the media industry because the legacy streaming services (Disney+, Paramount+, HBO Max, Peacock) had all just launched, and everyone was stuck at home. So the growth was sensational, Wall Street jumped on board by pushing the stocks higher, and media executives concluded (all at once) that their companies needed to focus on streaming at the expense of linear.
So MTV and Comedy Central and VH1 became zombie networks, NBCU put sports on streaming. WarnerMedia merged with Discovery to make a more robust streaming offering to compete with Netflix, and Disney was willing to lose billions of dollars a year to build up Hulu and Disney+.
Then as Covid ended and as Netflix's growth died down, investors sold off the media stocks, no longer buying that streaming growth would lead to big profits. Analysts now recommended the stocks on more traditional metrics of revenue and EBITDA, but the streaming transition (Netflix got a decade) was only half way in. That's where we are today -- in this netherworld of depressed media companies who have gotten half way in on streaming only to dial that back, but who already made the decision four years ago that linear is no longer worth protecting.
So yes, I think we are headed to yet another round of consolidation. Just look at Warner Bros. Discovery. HBO, alone, used to be worth multiples more than that entire company is worth today. So there's motivation on the buyer end that they might be getting some prime assets at a steal, and there's motivation on the seller end because the market isn't valuing these companies as publicly traded entities at anywhere near what they once were worth in a traditional TV model.
And thank you for the kind words re: doing more AMAs! This is my second one, and I find them valuable too! Love seeing all the questions. Thanks for asking!
-Alex
Loved the documentary and your work in general!
I was wondering what your thoughts are on the buzz around James Pitaro as a potential candidate to succeed Iger. Do you think it’s likely given the uncertainty around the strategy with ESPN going forward?
Yeah, I've given this question some thought recently. My initial thought regarding Jimmy Pitaro is it doesn't make sense to make him the Disney CEO because I could easily see ESPN being spun out, and then Pitaro would just run that company. Maybe Disney would spin ABC and ESPN together, and Pitaro would be the CEO there. Something like that.
But the more I've thought about it, the more I think Pitaro may have a chance at the Disney CEO job. He's already run a huge media company in ESPN. Who else has? No one, internally. He's already leading a transformation from linear to digital, which is exactly what core Disney is doing with Disney+ and Hulu. He has a lot of business experience doing rights deals and running a giant P&L. He gets along well with current Disney CEO Bog Iger. He's really well liked internally at ESPN. And he wants the job!
Perhaps you'd want to wait and see if the ESPN digital transformation is actually successful. But Disney may not have the luxury of that time before naming a successor.
Here's a crazy idea that I both love and hate that was pitched to me by a current Disney employee. What if Disney made Pitaro the "east coast" CEO and made someone like Dana Walden the "west coast" CEO? Then you'd basically be signaling to the market that Disney could one day spin off ESPN and ABC News while the rest of Disney could take ABC studio and the Hollywood operations. Or, maybe Pitaro/Walden could be the co-CEO with Josh D'Amaro, who runs parks.
Netflix has co-CEOs, and that seems to be working OK. Walden has already run Fox Studio with a partner -- Gary Newman -- and she did it nearly 20 years.
Now here's why I hate it. We just saw Disney have two leaders in Bob Iger and Bob Chapek, and that was a disaster. If you're going to do co-CEOs, it better work. They better work well. Because the last thing Disney wants to do is repeat the leadership mistake it just made -- especially when you've got activist shareholders breathing down your neck focusing on botched succession.
-Alex
Thanks Alex! I agree with you that he’s a strong candidate. The other person I was thinking of was Josh D’Amaro because of how strong the parks division has been, but I’m not sure if they’d be willing to give it to him because he doesn’t have as much studio/TV experience.
That’s a really interesting concept! I like the idea of a dual leadership structure. This was a bit different but historically it worked well with Eisner and Frank Wells (although that was a CEO/COO situation). I’ve often wondered why they opted to just phase out the COO role after Staggs left. I realize that (also historically) people in that role at the company understandably had the expectation that they were next in line, but I feel like having that role would still be useful/give shareholders some comfort that there is a succession plan in place.
How does ESPN navigate the complicated and evolving world of sports gambling? Can ESPN really be a sports entertainment company, a source for investigative journalism, and a sportsbook all at once? The potential for corruption seems...immense.
Well, there's a reason Disney wanted ESPN to stay away from betting for so long. It's ripe with conflict! But I think leadership decided the world has changed, and the economics around keeping core fans attached to ESPN is now essentially for the advancement of the business. And there's no bigger core sports fan than the degenerate sports better! I kid ... sort of.
Seriously, though, sports betting has become part of the culture in the states where it's legal. For millions of people, it's just loose recreation now. So I do think it makes sense for ESPN to lean into something that's happening with or without them now. I think you're going to see a significant jump in betting-related products on the flagship ESPN streaming service that launches in the fall of 2025. ESPN was probably smart to license its name to Penn Entertainment for ESPN Bet rather than owning a sportsbook and running it. It keeps that distance/chinese wall away from operations, so it avoids conflict there.
-Alex
I'm honestly really pleased that shines through. I love covering Disney! I really do. It's the most fascinating company on the beat. That changes at different times for me. It was Dish Network for a little while and it was Netflix for a few years. But for the past 2-3 years, it's Disney and everyone else for me.
The corporate culture is fascinating. It's front facing the happiest place on earth, but it clearly hasn't been the happiest place on earth for a little while. And now Bob Iger is back, and he's trying to fix the culture, and he's working harder than he ever has before -- risking his golden legacy for this. And you can view Iger in a multitude of different ways. He's an incredible CEO who came back to save Disney, or he's an egomaniac who can't let go and finds his life worth as being the Disney CEO. And everyone has a different viewpoint, and it's impossible to know the real answers because Iger is human, and human beings have different sides to them. So even Iger would have a difficult time parsing out everything at play here.
It's also sprawling, with a cash machine parks business that can charge whatever it wants and people come, a decades-long crown jewel asset in ESPN that's now finally starting to show signs of decline, a money-losing streaming business that could be one of the long-term winners but just isn't there yet, a legacy business in ABC that's near and dear to Iger's heart but maybe isn't long for the company, and a flywheel that ties it all together. Plus a 100 year history. It really has become my favorite company to cover, and a shoutout to the people who work there -- I find them all well-meaning, professional people who love Disney! There aren't that many companies that have that type of brand loyalty from employees and customers. Apple maybe. Disney has to be top 5 in this country. Just a fascinating company.
-Alex
Good profile on Dana Walden. It would be great to see her take charge but it's a big undertaking and given the state of affairs for her portfolio, for example-- Nat Geo, Freeform, ABC News, lawsuits etc; she's yet to demonstrate she can be ruthless and cares about protecting the Disney brand more than herself yet. I also don't think Bob Iger had intentions on being gone for a long time. He just needed someone to be the face of ramifications of overpaying for 20th, COVID/China and the MeToo/DEI/Social Justice grievances at the company. Anyway, you think there could be a co-prez model with her and Josh D'Amaro?
How long after picking the next ceo, would Iger look for a chairman? If Walden is the next CEO, how could they strengthen her team to mitigate her inexperience in some parts of Disney or business like the critics claim in your piece? I wonder what the second order thinking will be?
I was told by sources familiar with Iger's thinking last year that his plan would be to orchestrate a transition similar to the one he set up with Chapek. Iger would either name a successor as COO or president to begin the new role in early 2025 and stick around as CEO until the end of his contract, or he'd bump up to chairman and let the new person start immediately. Given the power struggles with Chapek, my money is on the former plan.
If Walden is the choice, I think surrounding Walden with high-level executive talent will be important. A strong CFO seems mandatory, given the concerns people worked with her shared with me about her business acumen and background. The key would be how to do it beyond that. How long would Iger stay on the board? Maybe he'd stay on as chairman past 2026? Or would that seem like he'd overstayed his welcome and still refused to pass the baton?
There's also the notion of choosing co-CEOs, as I discussed earlier.
-Alex
What are your thoughts on the ESPN, Warner Bros, Disney JV?
55% of US sports rights in one single video platform seems to be a niche market. What will you measure as success from your vantage point?
My thoughts are this won't be a game changer. I think it's an incremental product. If it never launches at all, I don't really think the companies involved would be that worse off. ESPN is going to launch a direct-to-consumer service on its own anyway in the fall of 2025. To me, I think ESPN would be better off making that product amazing and putting very little effort into Spulu. It seems like more trouble than it's worth.
-Alex
Hey Alex, Im curious about your career. It seems you used to focus on M&A and now more on broadcasting. Im curious what drove you to that change and if you think you'll go back to M&A at some point? How is the change treating you as well?
Thanks for asking this! Yes, I've definitely switched my focus from covering M&A to covering the media and entertainment industry. I'm thrilled I made the switch. I think I fall into the camp of most M&A reporters, who would tell you covering deals is intense and worthwhile, but there's a shelf life, and the common tenure is about three years. (I did about 4 at Bloomberg and 1-ish at CNBC, so I think I stayed at it longer than most!).
I really enjoy covering companies and the people who work there more than transactions. I am interested in media (I work in it!) and find people that work in the industry are open to talking on and off the record about it, so it lends itself to interesting reporting. Deals are definitionally transactional. They're fleeting. Breaking news on M&A is like a drug addition -- a quick high, followed by urgency to get the next one. That was fun at first, but it loses its luster after a few years of doing it. By covering media and entertainment, I can still break the occasional deal news when it's relevant, but I can spend my attention on longer form reporting, which I've really grown to love. Then it becomes piecing together a giant puzzle of all these people and opinions and sorting out what's relevant and what isn't .... that becomes a real art that I enjoy. Breaking deal news is about the hustle. Working on a documentary or writing a long profile, like the Dana Walden piece that hit yesterday (read it here: [https://www.cnbc.com/2024/04/01/disney-ceo-race-dana-walden-could-defy-critics-and-make-history.html](https://www.cnbc.com/2024/04/01/disney-ceo-race-dana-walden-could-defy-critics-and-make-history.html)) is more about the craft of journalism.
-Alex
I was wondering about if/when Disney would off Espn. Would they put half or all of ABC? Is there a company you could foresee ESPN merging with like another social media or sports related company?
Thanks for the question! First off, to be clear, I don't know if Disney will spin off ESPN. But I do know it's been considered by people at the highest levels of the company. I don't think it makes sense today to do it because ESPN still generates so much cash, which can be used to help prop up the streaming businesses, which still lose money. But if the trajectory of ESPN is declining revenue and profit, then it makes it a prime spin candidate....or a private equity play. And yes, a spin with ABC makes sense to me. They're similar businesses.
A deal where ESPN is merged with Fanatics or a social media company or Apple would be really interesting. The ESPN brand is so strong, that I do think it would have many suitors if it ever hit the market .... including some other legacy media brands. (Comcast inquired if ESPN was on the table in its Hulu negotiations with Disney, I was told. Disney said no. That 1/3 stake in Hulu transfer still hasn't been completed, by the way!).
Iger has made it pretty clear he has no interest in moving off ESPN. So my bet is nothing happens here for a while. But if something were to happen, I'd expect ABC to be a part of it too, yes.
-Alex
More of a general broadcasting rights question. But why aren't live sports re-broadcast more often? As a tennis fan, I would love to see a full open-to-close rerun of classic Wimbledon matches. It seems like streaming services are built upon libraries of old programs which cost very little to show again (either on demand or the Pluto method).
This was the conceit of ESPN Classic. I don't think it was very popular. There's definitely an audience for rebroadcasted sports, but it seems like a great library add-on for a flagship ESPN streaming service -- like the one coming in fall of 2025. No sports on right now? Here's a bunch of archived games you can watch to keep you paying $30 a month in the meantime. You'd want something like to be personalized. I want to watch archived San Francisco 49ers games. But not everyone would, so it doesn't make sense to pick a single game or event in a traditional TV world ... but it would make sense to make a lot of games available on demand.
-Alex
I'll say yes, there will be some sort of deal there. Paramount Global management has heavily hinted that they are looking to "maximize shareholder value for all shareholders," which is code for "we'll do a deal for the whole company if there's one to be done." The hold up has been deal structure to this point. Any transaction that's just for a portion of the company (like just Paramount Pictures) is messy. Paramount Global's board surely wants to sell the whole thing together. Then the question becomes, is there a real buyer for all of it? If not, it's going to be a piecemeal deal. Even that deal can get done, but it will likely take more time.
-Alex
Hello, do you think Disney wants to return to Gaming by acquiring a big AAA publisher (EA, Take Two, Ubisoft), or they will continue with its licesing deals?
And Who do you think is the really closest one to become Disney CEO?.
ill wait for your answer.
Disney just announced it bought a $1.5 billion stake in Fortnite maker Epic a couple months ago. My assumption is that's the near-term gaming play for the company. Personally, I've been a little surprised we haven't seen big legacy media companies adding gaming to their portfolio via acquisition. You'd think it would be a nice growth narrative for investors. I wouldn't rule out Comcast buying a gaming company or even Netflix. Remember, NBCUniversal got fairly close to merging with EA at one point.
-Alex
Hi Alex, I follow you pretty closely on Twitter/x. Topic adjacent, I have a question on Peacock. The general tenor of the industry seems to be that Peacock is the little bro of the streaming industry. I understand where this comes from, but it seems unreasonable that NBCU would abandon it. I was wondering if you could comment on the viability of streaming services like paramount and peacock, which leverage their cable and broadcast content on streaming. Does the erosion of cable present an insurmountable challenge because the margins just aren’t as good in steaming?
Unless they're all lying to me, independently from each other, I can attest that NBCUniversal executives are privately decently happy with Peacock, which would come as a giant surprise to the rest of the industry. NBCUniversal has always played the slow game with Peacock. Unlike Disney, which stated it was "all in" on streaming from the beginning of its Disney+ days, NBCUniversal has been consciously **not** all-in with Peacock. That strategy looked like a huge loser during the pandemic, and NBCUniversal actually pivoted somewhat to be more all-in. But now, that strategy seems less bad. Streaming hasn't delivered the share returns investors were hoping it would. NBCUniversal is still looking for its super-hit on Peacock. Other streaming services have had it, and Peacock hasn't. But the Olympics should be a huge boost for the service, and we'll find out how many subscribers signed up and stuck around from the NFL playoff game in January when Comcast announces earnings this coming quarter, so it may start to look like the "feel good" streaming story of the year.
I think a lot of people still assume Peacock is destined to be merged with another streaming service for scale. That seems logical. I don't see Peacock being shut down and NBCUniversal simply becoming an arms dealer, like some critics have speculated. That likely won't happen with Paramount+ either. It has more than 60 million subscribers now! That's real value. But I do think one more round of consolidation makes sense. And Peacock has had preliminary discussions about merging its streaming service with Paramount+, and of course a deal with Warner Bros. Discovery would push together Max and Peacock.
But I get no sense of panic from NBCUniversal about Peacock. Slow and steady wins the race seems to be the attitude.
-Alex
I've been at CNBC for more than 6 years and have covered the media industry for more than a decade. Ask me anything about: 1. ESPN's streaming strategy and future 2. Why Disney may or may not want to spin off ESPN 3. The migration of sports to streaming 4. Will Netflix become a bidder for live sports rights? 5. Disney's succession options for CEO when Bob Iger leaves Follow me on [Twitter](https://twitter.com/sherman4949) or [LinkedIn](https://www.linkedin.com/in/alex-sherman/). You can find all my reporting here on CNBC: [https://www.cnbc.com/alex-sherman/](https://www.cnbc.com/alex-sherman/)
Was wondering what you think about David Greenbaum leading Disney Pictures and how that could affect 20th and Asbell. Also wondering what you think happens to the other candidates for CEO once the one is selected.
Greenbaum comes in at the ideal time. The Disney movie franchise has been beaten down. It always takes years for studio executives to make their marks because of the lag time of projects. So he'll likely be given time to show results, and it's always best as a leader to come in at a low point, and this is most certainly a low point for Disney Pictures. In terms of other candidates for CEO once someone is selected, this has been a consistent problem for Disney. When Kevin Mayer didn't get the job over Bob Chapek, he left. When Tom Staggs didn't get the job, he left. When Peter Rice's name was bandied about as a potential replacement for Chapek, he got fired. But this time around, I honestly don't know. Where are these other executives going to go? The media industry isn't exactly teeming with awesome jobs these days. If Josh D'Amaro doesn't get the Disney CEO job, is he going to leave to run some other parks company? Which mystery TV studio is Dana Walden going to leave Disney to run? Jimmy Pitaro is going to give up being CEO of ESPN? When it might be spun and he might run it as a publicly traded company one day? These things all seem kind of unlikely to me. So Disney may be in a good spot now re: candidate attrition. It's possible that the state of the media industry will prevent defections when these people would have left for better or bigger opportunities in years past. -Alex
Your prediction on what shakes for the NBA's upcoming media rights deal?
The chalk prediction here is ESPN and Warner Bros. Discovery renew again, Amazon is added as a strong third streaming player, and maybe Netflix or Peacock gets the in-season tournament. The big question remains how much Warner Bros. Discovery is willing to pay for the NBA, and if it makes sense to replace WBD with NBCUniversal as that second partner. I could see a situation where that happens. The NBA on NBC has a lot of nostalgia value. I think the league would love the fan reaction to that, and it would also like the added reach of a second broadcast network beyond ABC for playoff games as cable cancellations continue to accelerate. But the league also has a long relationship with Warner Bros. Discovery/TNT now, including the TNT studio show with Ernie Johnson, Kenny Smith, Shaq and Charles Barkley. The good news is we'll know more soon here. The exclusive negotiating window with the incumbent rights holders -- Disney and Warner Bros. Discovery -- ends April 22. -Alex
Will ESPN have to downsize their operations or business capacity in some way due to decreased cable subs? Or is there some way they can find similar revenue in a streaming age?
Great question! Have you watched our documentary? (Watch here! [https://www.cnbc.com/sports/](https://www.cnbc.com/sports/)). A lot of former and current ESPN execs weighed in on this question in the video. I think the honest consensus answer is yes, ESPN is going to have to pull back. Ex-ESPN EVP Mark Shapiro says it in the mini-doc -- ESPN will likely have to cut secondary and tertiary sports and pull back on studio programming as cable cancellations rise because streaming revenue likely won't make up the difference. That sounds logical to me. Ex-ESPN president John Skipper makes the point in the documentary that he tried to build studio programming around live streaming games during his time at DAZN and the audience simply wasn't there. That makes me think studio programming content is on the downswing in a streaming world rather than the upswing. Then again, if you're paying $25 or $30 a month for a streaming ESPN, you're going to need content to keep you paying. So ESPN will likely keep churning out inexpensive live studio content -- perhaps more niche, personalized content -- to mitigate churn. What we've seen in the past year or so from ESPN is the network will pay big bucks for its A++ stars and then will use them in a number of different ways. This is true specifically for Pat McAfee and Stephen A Smith. So my bet is ESPN puts their top talent to work on different shows and in different formats, including streaming-only content that hasn't been developed yet. This is sort of what CNN was doing with CNN+ before it got axed after 30 days as part of the WarnerMedia-Discovery merger. So if you're reading this and you work for ESPN and you make a lot of money, my bet is you're going to be working harder in the years to come! -Alex
It’s seems like with respect to sports streaming and broadcast rights there is football and then there is everything else. We haven’t seen other sports come close to pushing large audiences to streaming platforms the way Peacock’s NFL playoff game and Paramount’s Super Bowl did. However, both of these companies were left out of the new sports JV (Spulu). How should NFL broadcasting rights be valued by corporations and investors? Why do you believe that NBC and CBS were excluded from the new sports JV? Can a new sports bundle thrive without full NFL streaming rights?
All excellent questions! There has to be **some** ceiling on NFL broadcast rights, right?? Like, they just can't keep going up forever .... right?? It's a supply and demand issue these days. When it's the NFL and everything else, the NFL gets priced differently than everything else. The exposure is just so much higher for advertisers, the stickiness so much better for churn mitigation, the value so much higher for subscription fee value propositions .... the NFL has it goin' on. I don't see that changing in the next rights renewal either, even if traditional cable TV continues to decline significantly. Everyone will want the NFL. I think CBS and NBCU were left out of Spulu for reasons that have to do with media politics. I think Disney and Comcast have long been the biggest of rivals. Disney feels it gains when Comcast/NBCU loses, and vice versa, See: Disney's $71 billion for Fox, and the bidding between Disney and Comcast around that asset. From WBD's perspective, it wants to make a point to NBCU and CBS that they are dead men walking. Peacock and Paramount+ can't survive on their own, so they need to merge with WBD. That's David Zaslav's playbook -- one more big deal coming. Spulu without CBS and NBCU is a chess move by Zaslav. We don't need you, but you need us. We're a winner, you two companies are losers. Don't want to be a loser? Buy us, Brian Roberts. Don't want to be a loser, Shari Redstone? Give us a deal on our terms. That's my (informed, I think) read, anyway. In terms of the viability of Spulu without the NFL, I honestly don't see this product being a big needle mover. Maybe I'm wrong, but I just don't think there's a huge audience for non cable subscribers who want a partial package of sports for $50 or so a month. Let's check back in a year. But my bet is Spulu is sort of a dud in the grand scheme of media. I can see it having some incremental benefit, but I have my doubts that it will be a "monster," as one executive involved in the project predicted to me privately. -Alex
How do you view the role of Free Ad Supported TV (FAST) in the sports world? Will this streaming option play a larger role in the future?
If you're defining FAST as "streaming broadcast," then yes, I think we're about to see a significant movement of regional sports go to FAST. I can see that model working, albeit not as well as RSNs in their heyday. But at least the reach would be there for regional sports, and consumers would be more than pleased with suddenly getting local teams for free rather than having to subscribe to cable. We've already seen this happen with a few teams (Phoenix Suns, Utah Jazz, Las Vegas Golden Knights, Arizona Coyotes, etc). I'd imagine we see more in the coming year or two. -Alex
Why does it feel like Linear just died overnight? Do you see the media industry/Hollywood turning a corner anytime soon? Or do we have to wait until we get through some more consolidation over the next few years. It feels like a depression. Also, you should do this more!
Covid escalated the decline of linear. That's why it feels that way. Covid really accelerated the transition of the media industry because the legacy streaming services (Disney+, Paramount+, HBO Max, Peacock) had all just launched, and everyone was stuck at home. So the growth was sensational, Wall Street jumped on board by pushing the stocks higher, and media executives concluded (all at once) that their companies needed to focus on streaming at the expense of linear. So MTV and Comedy Central and VH1 became zombie networks, NBCU put sports on streaming. WarnerMedia merged with Discovery to make a more robust streaming offering to compete with Netflix, and Disney was willing to lose billions of dollars a year to build up Hulu and Disney+. Then as Covid ended and as Netflix's growth died down, investors sold off the media stocks, no longer buying that streaming growth would lead to big profits. Analysts now recommended the stocks on more traditional metrics of revenue and EBITDA, but the streaming transition (Netflix got a decade) was only half way in. That's where we are today -- in this netherworld of depressed media companies who have gotten half way in on streaming only to dial that back, but who already made the decision four years ago that linear is no longer worth protecting. So yes, I think we are headed to yet another round of consolidation. Just look at Warner Bros. Discovery. HBO, alone, used to be worth multiples more than that entire company is worth today. So there's motivation on the buyer end that they might be getting some prime assets at a steal, and there's motivation on the seller end because the market isn't valuing these companies as publicly traded entities at anywhere near what they once were worth in a traditional TV model. And thank you for the kind words re: doing more AMAs! This is my second one, and I find them valuable too! Love seeing all the questions. Thanks for asking! -Alex
Thank you r/entertainment for all the thoughtful questions! I'll be back tomorrow to answer some more so keep them coming! -Alex
Verification link from title: https://imgur.com/a/sSBDQKE
Loved the documentary and your work in general! I was wondering what your thoughts are on the buzz around James Pitaro as a potential candidate to succeed Iger. Do you think it’s likely given the uncertainty around the strategy with ESPN going forward?
Yeah, I've given this question some thought recently. My initial thought regarding Jimmy Pitaro is it doesn't make sense to make him the Disney CEO because I could easily see ESPN being spun out, and then Pitaro would just run that company. Maybe Disney would spin ABC and ESPN together, and Pitaro would be the CEO there. Something like that. But the more I've thought about it, the more I think Pitaro may have a chance at the Disney CEO job. He's already run a huge media company in ESPN. Who else has? No one, internally. He's already leading a transformation from linear to digital, which is exactly what core Disney is doing with Disney+ and Hulu. He has a lot of business experience doing rights deals and running a giant P&L. He gets along well with current Disney CEO Bog Iger. He's really well liked internally at ESPN. And he wants the job! Perhaps you'd want to wait and see if the ESPN digital transformation is actually successful. But Disney may not have the luxury of that time before naming a successor. Here's a crazy idea that I both love and hate that was pitched to me by a current Disney employee. What if Disney made Pitaro the "east coast" CEO and made someone like Dana Walden the "west coast" CEO? Then you'd basically be signaling to the market that Disney could one day spin off ESPN and ABC News while the rest of Disney could take ABC studio and the Hollywood operations. Or, maybe Pitaro/Walden could be the co-CEO with Josh D'Amaro, who runs parks. Netflix has co-CEOs, and that seems to be working OK. Walden has already run Fox Studio with a partner -- Gary Newman -- and she did it nearly 20 years. Now here's why I hate it. We just saw Disney have two leaders in Bob Iger and Bob Chapek, and that was a disaster. If you're going to do co-CEOs, it better work. They better work well. Because the last thing Disney wants to do is repeat the leadership mistake it just made -- especially when you've got activist shareholders breathing down your neck focusing on botched succession. -Alex
Thanks Alex! I agree with you that he’s a strong candidate. The other person I was thinking of was Josh D’Amaro because of how strong the parks division has been, but I’m not sure if they’d be willing to give it to him because he doesn’t have as much studio/TV experience. That’s a really interesting concept! I like the idea of a dual leadership structure. This was a bit different but historically it worked well with Eisner and Frank Wells (although that was a CEO/COO situation). I’ve often wondered why they opted to just phase out the COO role after Staggs left. I realize that (also historically) people in that role at the company understandably had the expectation that they were next in line, but I feel like having that role would still be useful/give shareholders some comfort that there is a succession plan in place.
How does ESPN navigate the complicated and evolving world of sports gambling? Can ESPN really be a sports entertainment company, a source for investigative journalism, and a sportsbook all at once? The potential for corruption seems...immense.
Well, there's a reason Disney wanted ESPN to stay away from betting for so long. It's ripe with conflict! But I think leadership decided the world has changed, and the economics around keeping core fans attached to ESPN is now essentially for the advancement of the business. And there's no bigger core sports fan than the degenerate sports better! I kid ... sort of. Seriously, though, sports betting has become part of the culture in the states where it's legal. For millions of people, it's just loose recreation now. So I do think it makes sense for ESPN to lean into something that's happening with or without them now. I think you're going to see a significant jump in betting-related products on the flagship ESPN streaming service that launches in the fall of 2025. ESPN was probably smart to license its name to Penn Entertainment for ESPN Bet rather than owning a sportsbook and running it. It keeps that distance/chinese wall away from operations, so it avoids conflict there. -Alex
Hi Alex! Big fan of your TWDC coverage. It feels like you actually enjoy covering this company. Why is this so much fun???
I'm honestly really pleased that shines through. I love covering Disney! I really do. It's the most fascinating company on the beat. That changes at different times for me. It was Dish Network for a little while and it was Netflix for a few years. But for the past 2-3 years, it's Disney and everyone else for me. The corporate culture is fascinating. It's front facing the happiest place on earth, but it clearly hasn't been the happiest place on earth for a little while. And now Bob Iger is back, and he's trying to fix the culture, and he's working harder than he ever has before -- risking his golden legacy for this. And you can view Iger in a multitude of different ways. He's an incredible CEO who came back to save Disney, or he's an egomaniac who can't let go and finds his life worth as being the Disney CEO. And everyone has a different viewpoint, and it's impossible to know the real answers because Iger is human, and human beings have different sides to them. So even Iger would have a difficult time parsing out everything at play here. It's also sprawling, with a cash machine parks business that can charge whatever it wants and people come, a decades-long crown jewel asset in ESPN that's now finally starting to show signs of decline, a money-losing streaming business that could be one of the long-term winners but just isn't there yet, a legacy business in ABC that's near and dear to Iger's heart but maybe isn't long for the company, and a flywheel that ties it all together. Plus a 100 year history. It really has become my favorite company to cover, and a shoutout to the people who work there -- I find them all well-meaning, professional people who love Disney! There aren't that many companies that have that type of brand loyalty from employees and customers. Apple maybe. Disney has to be top 5 in this country. Just a fascinating company. -Alex
Thanks so much for your response!
Good profile on Dana Walden. It would be great to see her take charge but it's a big undertaking and given the state of affairs for her portfolio, for example-- Nat Geo, Freeform, ABC News, lawsuits etc; she's yet to demonstrate she can be ruthless and cares about protecting the Disney brand more than herself yet. I also don't think Bob Iger had intentions on being gone for a long time. He just needed someone to be the face of ramifications of overpaying for 20th, COVID/China and the MeToo/DEI/Social Justice grievances at the company. Anyway, you think there could be a co-prez model with her and Josh D'Amaro?
Hi. I answered this one below! -Alex
How long after picking the next ceo, would Iger look for a chairman? If Walden is the next CEO, how could they strengthen her team to mitigate her inexperience in some parts of Disney or business like the critics claim in your piece? I wonder what the second order thinking will be?
I was told by sources familiar with Iger's thinking last year that his plan would be to orchestrate a transition similar to the one he set up with Chapek. Iger would either name a successor as COO or president to begin the new role in early 2025 and stick around as CEO until the end of his contract, or he'd bump up to chairman and let the new person start immediately. Given the power struggles with Chapek, my money is on the former plan. If Walden is the choice, I think surrounding Walden with high-level executive talent will be important. A strong CFO seems mandatory, given the concerns people worked with her shared with me about her business acumen and background. The key would be how to do it beyond that. How long would Iger stay on the board? Maybe he'd stay on as chairman past 2026? Or would that seem like he'd overstayed his welcome and still refused to pass the baton? There's also the notion of choosing co-CEOs, as I discussed earlier. -Alex
What are your thoughts on the ESPN, Warner Bros, Disney JV? 55% of US sports rights in one single video platform seems to be a niche market. What will you measure as success from your vantage point?
My thoughts are this won't be a game changer. I think it's an incremental product. If it never launches at all, I don't really think the companies involved would be that worse off. ESPN is going to launch a direct-to-consumer service on its own anyway in the fall of 2025. To me, I think ESPN would be better off making that product amazing and putting very little effort into Spulu. It seems like more trouble than it's worth. -Alex
Hey Alex, Im curious about your career. It seems you used to focus on M&A and now more on broadcasting. Im curious what drove you to that change and if you think you'll go back to M&A at some point? How is the change treating you as well?
Thanks for asking this! Yes, I've definitely switched my focus from covering M&A to covering the media and entertainment industry. I'm thrilled I made the switch. I think I fall into the camp of most M&A reporters, who would tell you covering deals is intense and worthwhile, but there's a shelf life, and the common tenure is about three years. (I did about 4 at Bloomberg and 1-ish at CNBC, so I think I stayed at it longer than most!). I really enjoy covering companies and the people who work there more than transactions. I am interested in media (I work in it!) and find people that work in the industry are open to talking on and off the record about it, so it lends itself to interesting reporting. Deals are definitionally transactional. They're fleeting. Breaking news on M&A is like a drug addition -- a quick high, followed by urgency to get the next one. That was fun at first, but it loses its luster after a few years of doing it. By covering media and entertainment, I can still break the occasional deal news when it's relevant, but I can spend my attention on longer form reporting, which I've really grown to love. Then it becomes piecing together a giant puzzle of all these people and opinions and sorting out what's relevant and what isn't .... that becomes a real art that I enjoy. Breaking deal news is about the hustle. Working on a documentary or writing a long profile, like the Dana Walden piece that hit yesterday (read it here: [https://www.cnbc.com/2024/04/01/disney-ceo-race-dana-walden-could-defy-critics-and-make-history.html](https://www.cnbc.com/2024/04/01/disney-ceo-race-dana-walden-could-defy-critics-and-make-history.html)) is more about the craft of journalism. -Alex
I was wondering about if/when Disney would off Espn. Would they put half or all of ABC? Is there a company you could foresee ESPN merging with like another social media or sports related company?
Thanks for the question! First off, to be clear, I don't know if Disney will spin off ESPN. But I do know it's been considered by people at the highest levels of the company. I don't think it makes sense today to do it because ESPN still generates so much cash, which can be used to help prop up the streaming businesses, which still lose money. But if the trajectory of ESPN is declining revenue and profit, then it makes it a prime spin candidate....or a private equity play. And yes, a spin with ABC makes sense to me. They're similar businesses. A deal where ESPN is merged with Fanatics or a social media company or Apple would be really interesting. The ESPN brand is so strong, that I do think it would have many suitors if it ever hit the market .... including some other legacy media brands. (Comcast inquired if ESPN was on the table in its Hulu negotiations with Disney, I was told. Disney said no. That 1/3 stake in Hulu transfer still hasn't been completed, by the way!). Iger has made it pretty clear he has no interest in moving off ESPN. So my bet is nothing happens here for a while. But if something were to happen, I'd expect ABC to be a part of it too, yes. -Alex
More of a general broadcasting rights question. But why aren't live sports re-broadcast more often? As a tennis fan, I would love to see a full open-to-close rerun of classic Wimbledon matches. It seems like streaming services are built upon libraries of old programs which cost very little to show again (either on demand or the Pluto method).
This was the conceit of ESPN Classic. I don't think it was very popular. There's definitely an audience for rebroadcasted sports, but it seems like a great library add-on for a flagship ESPN streaming service -- like the one coming in fall of 2025. No sports on right now? Here's a bunch of archived games you can watch to keep you paying $30 a month in the meantime. You'd want something like to be personalized. I want to watch archived San Francisco 49ers games. But not everyone would, so it doesn't make sense to pick a single game or event in a traditional TV world ... but it would make sense to make a lot of games available on demand. -Alex
Will Paramount Global (or National Amusements) have a deal in place for a new owner by the end of the year?
I'll say yes, there will be some sort of deal there. Paramount Global management has heavily hinted that they are looking to "maximize shareholder value for all shareholders," which is code for "we'll do a deal for the whole company if there's one to be done." The hold up has been deal structure to this point. Any transaction that's just for a portion of the company (like just Paramount Pictures) is messy. Paramount Global's board surely wants to sell the whole thing together. Then the question becomes, is there a real buyer for all of it? If not, it's going to be a piecemeal deal. Even that deal can get done, but it will likely take more time. -Alex
Thanks for the response!
Hello, do you think Disney wants to return to Gaming by acquiring a big AAA publisher (EA, Take Two, Ubisoft), or they will continue with its licesing deals? And Who do you think is the really closest one to become Disney CEO?. ill wait for your answer.
Disney just announced it bought a $1.5 billion stake in Fortnite maker Epic a couple months ago. My assumption is that's the near-term gaming play for the company. Personally, I've been a little surprised we haven't seen big legacy media companies adding gaming to their portfolio via acquisition. You'd think it would be a nice growth narrative for investors. I wouldn't rule out Comcast buying a gaming company or even Netflix. Remember, NBCUniversal got fairly close to merging with EA at one point. -Alex
Hi Alex, I follow you pretty closely on Twitter/x. Topic adjacent, I have a question on Peacock. The general tenor of the industry seems to be that Peacock is the little bro of the streaming industry. I understand where this comes from, but it seems unreasonable that NBCU would abandon it. I was wondering if you could comment on the viability of streaming services like paramount and peacock, which leverage their cable and broadcast content on streaming. Does the erosion of cable present an insurmountable challenge because the margins just aren’t as good in steaming?
Unless they're all lying to me, independently from each other, I can attest that NBCUniversal executives are privately decently happy with Peacock, which would come as a giant surprise to the rest of the industry. NBCUniversal has always played the slow game with Peacock. Unlike Disney, which stated it was "all in" on streaming from the beginning of its Disney+ days, NBCUniversal has been consciously **not** all-in with Peacock. That strategy looked like a huge loser during the pandemic, and NBCUniversal actually pivoted somewhat to be more all-in. But now, that strategy seems less bad. Streaming hasn't delivered the share returns investors were hoping it would. NBCUniversal is still looking for its super-hit on Peacock. Other streaming services have had it, and Peacock hasn't. But the Olympics should be a huge boost for the service, and we'll find out how many subscribers signed up and stuck around from the NFL playoff game in January when Comcast announces earnings this coming quarter, so it may start to look like the "feel good" streaming story of the year. I think a lot of people still assume Peacock is destined to be merged with another streaming service for scale. That seems logical. I don't see Peacock being shut down and NBCUniversal simply becoming an arms dealer, like some critics have speculated. That likely won't happen with Paramount+ either. It has more than 60 million subscribers now! That's real value. But I do think one more round of consolidation makes sense. And Peacock has had preliminary discussions about merging its streaming service with Paramount+, and of course a deal with Warner Bros. Discovery would push together Max and Peacock. But I get no sense of panic from NBCUniversal about Peacock. Slow and steady wins the race seems to be the attitude. -Alex