Good evening, I’m Dylan Byers.

Welcome back to In The Room, my biweekly private email on the inner workings of the American media. Tonight, some gut checks on ESPN’s fate, CNN’s digital ambitions and Fred Ryan’s future at the Washington Post.

Bob Iger, then in his first, immortalized stint as C.E.O., foresaw that the underlying linear model was in inexorable decline and that ESPN was shedding millions of subscribers every year. But he also recognized ESPN’s unrivaled brand power and its direct-to-consumer potential. Moreover, he personally cherished it. Bob Chapek, Iger’s short-lived successor, was less sentimental about the business. As I reported in October 2021, Chapek had enlisted his deputies to explore the strategic rationale for selling or spinning off ESPN.

The company pushed back on that report at the time, though Iger himself confirmed last week that those talks indeed took place. “That had been done, by the way, in my absence,” he said on an earnings call, referring to spin-off considerations. Of course, that was before the Netflix correction, which shifted Wall Street’s obsession from growth back to revenue. By the summer of 2022, Chapek had abandoned the spin-off effort in favor of the dual-revenue stream model—linear plus streaming—with live sports as the lynchpin of the traditional business.

Now that Iger is back, Disney’s plans for ESPN have once again shifted, this time to a more uncertain place. In the recently unveiled restructuring, Iger has broken ESPN out into a stand-alone business unit, separate from Disney Entertainment—hence Pitaro’s promotion from president to chairman. The move inevitably invited questions about whether or not ESPN was being primed for a sale, but Iger quickly shot that speculation down. “We did not do it for that purpose,” he said on last week’s earnings call. “Actually, ESPN is a differentiator for this company, it is the best sports brand in television... [and] continues to create real value for us.”

In truth, it would be more accurate to say that ESPN’s fate is yet to be determined. In the near term, separating ESPN into its own segment allows Disney to divorce the incredibly high costs of sports rights from its core entertainment business, thereby making Disney+ look better—and less unprofitable—to the market. As even Iger himself seemed to acknowledge in the earnings call, the brand may be strong but the business is shaky. Revenues are declining while costs are skyrocketing, and will continue to skyrocket as rivals drive up the costs for sports rights.

ESPN currently has deals with the NCAA, NFL, MLB, and NBA, among others. The NBA deal is next in line for renewal, and it’s going to be a real barn burner. Earlier this week, CNBC’s Alex Sherman scooped that Brian Roberts harbors dreams of rehabilitating Roundball Rock, the John Tesh theme song that led The NBA on NBC through its dynastic run in the ’90s. Meanwhile, David Zaslav would like to keep the NBA on TNT, even if he publicly claims not to need it. And of course, Apple and Amazon are interested, too.

Iger once referred to the early days of the streaming era as an arms race. And yet the battle for live sports rights, which provide legacy value to linear and immense conversion potential to streamers, may be the real theater of war. In this climate, the ESPN brand is only a differentiator creating real value if Disney continues to fork over billions in sports rights, which becomes harder to justify as subscriptions decline. “The brand of ESPN is very healthy, and the programming of ESPN is very healthy,” Iger said on the earnings call. “We just have to figure out how to monetize it.”

That’s corporate code for managing ESPN’s own transition from linear to streaming, effectively figuring out when (and how) to take the flagship ESPN business direct to consumer, cannibalizing the linear business to grow the streaming revenue. When should ESPN start simulcasting its big NFL, NCAA, and NBA games on ESPN+? The faster it does so, the faster its linear business crumbles—which is a problem, because linear subscribers drive significantly more revenue than streaming subscribers. On the other hand, ESPN is still losing millions of subscribers every year. And there’s no exact science that will tell you just how many more people will start cutting the cord once they know they no longer need a cable subscription to access ESPN’s best games.

In his exalted first tenure, Iger proved masterful at making the tough calls to set up Disney for its foray into streaming and then handing the torch (and the headaches) to the next guy. That wouldn’t be a bad outcome here. And structuring the business unit up as its own also provides a failsafe if those headaches prove material.

In the early months of Licht’s tenure, there was some concern about whether digital would remain a priority—especially as the existing digital leadership team, helmed by Andrew Morse, scrambled for the exits, all while Licht was busy overhauling the network’s approach, implementing layoffs, and trying to launch a new morning show. But it turns out that Licht and Stephanopoulos have set a very bold target for the digital business. In the town hall, Stephanopoulos said he wants to double digital revenue to $1 billion over the next three to five years. He intends to get there by improving engagement, attracting younger users and optimizing non-breaking news content. And, while he didn’t rule out acquisitions, he signaled that his priority was strengthening the existing product.

Of course, it’s not clear exactly what Stephanopoulos, a veteran of NowThis, is going to do at CNN that his alma mater and his competitors haven’t. Presumably, Stephanopoulos is quite clear-eyed about the economic forces at play here, and understands that it’s virtually impossible to hit that target through ad revenue alone—especially in this economic climate, and in a market where digital CPMs are declining. The other method would be to pick up additional revenue by going direct to consumer, perhaps by charging users a small sum for access to additional content—an idea the previous leadership toyed around with for years. But the available evidence suggests CNN has very little appetite for a big subscription play after killing off CNN+—which, coincidentally, was also designed to get to $1 billion in revenue. Whatever the case, you can’t double revenue simply by hoping and wishing and crossing your fingers, so it’ll be interesting to see what they come up with.

Of course, only Bezos knows what he intends to do with that intel. And because he hasn’t yet told anyone what he intends to do, speculation has been flying around the newsroom about the fates of Ryan and his executive editor, Sally Buzbee. (Neither Ryan nor Buzbee could be reached.) Whatever Bezos decides to do, the contrasting rumors seem to point to at least one certainty: in the eyes of the Post rank-and-file, the current leadership situation is no longer tenable. The real question is whether Bezos, the most accomplished founder-C.E.O. of our time, will listen to them or remain loyal to management. What I’ve heard from everyone, however, is that Bezos is keeping his thoughts to himself.