Jimmy Pitaro, the recently-appointed chairman of ESPN, must be feeling a little bit of whiplash these days. When Pitaro was first promoted to run the network, in 2018, replacing the legendary and beloved John Skipper following his sudden exit, ESPN was viewed as core to the overall business—a linear cash cow and a key differentiator for Disney in the streaming wars. In the five years since, however, his parentco’s plans have ricocheted back and forth and back again, from public commitments about ESPN’s essential place in its portfolio to very real explorations of a sale or spin-off.
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.