If Apple wants ESPN, Disney likely to value it at $24 billion

As analysts report that Apple would be wise to purchase ESPN and its related properties, a financial analyst has slapped a mega valuation on the Worldwide Leader in Sports. It’s likely that Apple sees ESPN as a way to further enter the sports world. Meanwhile, Disney is looking to offload something that is costing the company millions.

Recently, Disney disclosed that ESPN is seeing a decline in revenue despite its status as Disney’s most valuable traditional TV asset. Yet, this does not mean Disney is looking to get rid of ESPN entirely. A joint venture or a contribution from an outside investor could help Disney in its shift to streaming. The company’s CEO, Bob Iger, said that movement to streaming was inevitable. As a result, ESPN could be a standalone app that subscribers pay for to get live content on ESPN, ESPN2, or the affiliated channels.

Apple presents an opportunity for outside investment into Disney to promote ESPN. However, if Apple, or another streaming platform like Amazon, Verizon, or Comcast, wants to get involved, that is going to be expensive. To recoup some of its losses, Disney could charge these investors significant money for a stake in ESPN. This week, Bank of America Global Research firm estimates Disney could secure a value of $24 billion for ESPN.

However, Bank of America conveyed some concern about ESPN. “ESPN is still a strong business and a premier brand, but it sits at the nexus of possible major business transformation,” the company said. “Transitions have historically proven difficult and typically not conducive to significant growth.”

Therefore, if an outside partner like Apple targets the 36% of ESPN available, it would cost well over $8 billion. Again, this is not for full ownership of ESPN, as Disney would still own 51%. Hearst Corporation already has a 20% stake in the company. The aforementioned $8 billion is for just over one-third of ESPN.

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Why would Apple pay so much to Disney for a stake in ESPN?

Apple, ESPN, and Disney can all benefit from a joint venture. Disney’s benefit is the clearest, as it injects cash and takes away the burden of something that has been costing the company money. Additionally, ESPN would be able to acquire more sports rights if Apple injects billions into the system.

For Apple and ESPN, this deal can help in the muddled sports streaming world. Live sports content is at the forefront of what Apple wants to produce.

“The massive appetite for live sports content remains the laser focus for Cupertino now to boost its streaming future and further tap into its massive installed base of 2 billion iOS devices worldwide,” Daniel Ives, an analyst at investment firm Wedbush Securities, said. 

With so many people having iPhones and other Apple devices, ESPN carries an unmatched assortment of live sports. Not only does this include various soccer leagues and competitions. ESPN has broadcast rights deals with the NFL, NBA, NHL, MLB, and an assortment of college sports.

Apple closing out its first year of broadcasting soccer

Apple is the biggest company in the world, and its foray into live sports moved into soccer after first starting with Major League Baseball. So far, MLS Season Pass has had mixed success in its first year. The arrival of Lionel Messi was a hit. However, the MLS Cup Playoffs have been widely criticized. Meanwhile, playoff TV ratings have been poor.

However, any struggles have not stopped Apple from looking into more soccer properties. ESPN would be a major move to acquire ESPN’s coverage of the Bundesliga, LaLiga, Championship, FA Cup, and more.

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