Disney will not spin off ESPN, per report

ESPN will remain under the Disney umbrella, at least for the time being.

After rumors of a potential ESPN spinoff emerged as Disney introduced new CEO Josh D’Amaro in March, it appears the new executive has decided to keep ESPN. According to a report by Peter Kafka in Business Insider, Disney has “decided against” an ESPN spinoff. “Instead, the sports network will stay inside the media giant, which thinks its presence will help its pivot to streaming,” Kafka reports.

The decision is not necessarily permanent. D’Amaro could “revisit his decision” in the future should a split between ESPN and Disney make sense. However, it’s currently a “non-discussion,” Kafka writes.

The news solidifies prior reporting that an ESPN spinoff was unlikely to happen. However, the network is reportedly open to potentially selling minority stakes in itself, similar to the recently closed NFL deal which saw the league purchase 10% of ESPN.

ESPN has long been rumored as a prime candidate to separate from the Disney mothership. Since 2015, around the time when the pay TV bundle began to experience declines from cord-cutting, ESPN’s importance to the Disney enterprise has shrunk. Once the cash cow funding the company’s other ventures, ESPN’s operating income now sits at about one-third of Disney’s experiences division, which includes the company’s theme parks and cruises.

Other media conglomerates have chosen to cut bait and split from their declining cable networks recently. Most notably, Comcast let go of most of its cable channels to form what is now called Versant earlier this year. Warner Bros. Discovery was prepared to spin off its cable networks later this year before Paramount swooped in and purchased the entire company.

The difference between those ventures and ESPN is that ESPN remains the linchpin of the entire pay TV bundle. Its economics are declining at a rate slower than its cable network peers.

Add to that, Disney recently invested heavily into the launch of ESPN’s new direct-to-consumer product hoping to begin replicating the once-great economics of the cable bundle with a digital platform. So far, that has proved challenging to almost every media company that has launched a streamer. But if there’s one network that could conceivably buck that trend, it’s ESPN.

So at least for now, ESPN will stay tied to Disney. But the door is still open for the Worldwide Leader to one day split from the company if Disney decides it’s time to move on.