As Disney reported fiscal year 2025 third quarter results Wednesday and prepares for the upcoming launch of its flagship ESPN direct-to-consumer service later this month, the entertainment company further molded its sports streaming future with a deal for ESPN to acquire media assets from the NFL in exchange for the league getting a 10% stake in the sports business.
Under the nonbinding agreement announced Tuesday, ESPN would acquire the NFL Network, as well as media assets including the NFL Red Zone linear channel and NFL Fantasy, from the NFL in exchange for a 10% equity stake. The sports powerhouse brand and professional U.S. football league entered into a second related agreement for the NFL to license ESPN certain content and other IP to be used by the NFL Network – namely three additional NFL games per season to air on the NFL Network.
“Today’s announcement paves the way for the world’s leading sports media brand and America’s most popular sport to deliver an even more compelling experience for NFL fans, in a way that only ESPN and Disney can,” said Robert Iger, CEO of The Walt Disney Company, in a statement. “Commissioner Goodell and the NFL have built outstanding media assets, and these transactions will add to consumer choice, provide viewers with even greater convenience and quality, and expand the breadth and value proposition of Disney’s streaming ecosystem.”
Both linear and digital rights of the NFL Network would be owned and operated by ESPN and fully integrated into the ESPN DTC streaming app that’s launching later this month. The network will continue to be distributed in the traditional pay TV ecosystem, as would the NFL RedZone channel for inclusion in pay TV operator’s sports packages.
The NFL Fantasy Football asset will merge with ESPN Fantasy Football to create a digital experience and the official Fantasy season-long game of the NFL.
Coinciding with Wednesday’s earnings release, Disney’s Iger commented on the agreement in prepared remarks saying it “includes expanded NFL highlight rights within multiple fan-engagement platforms, and more interactive features for ESPN’s DTC offering and the ESPN App, including betting and fantasy.”
ESPN also gains the ability to sell and bundle NFL+ Premium, which includes NFL Network and NFL RedZone to its ESPN DTC subscribers, he added, along with additional non-exclusive preseason NFL games for the forthcoming app, both starting in the 2025 season.
Iger noted that separate agreements extend ESPN’s NFL Draft rights, giving it the ability to stream ESPN and ABC’s draft coverage on the ESPN DTC, Hulu and Disney+.
“Since its launch in 2003, NFL Network has provided millions of fans unprecedented access to the sport they love,” said NFL Commissioner Roger Goodell in a statement. “Whether it was debuting Thursday Night Football, televising the Combine, or telling incredible football stories through original shows and breaking news, NFL Network has delivered. The Network’s sale to ESPN will build on this remarkable legacy, providing more NFL football for more fans in new and innovative ways.”
The transactions are still subject to parties’ negotiating definitive agreements and various company approvals. With details still being hammered out, no financial details were disclosed.
ESPN is 80% owned by indirect Disney subsidiary ABC and 20% owned by Hearst.
The deal gives ESPN a notable boost and a high-profile partner in the NFL, which will quite literally be invested in the sports streaming future of the brand. In addition, on Wednesday, ESPN announced a deal to become the exclusive U.S. domestic home of WWE Premium Live Events, including WrestleMania, starting in 2026.
The long-awaited flagship ESPN DTC product launches on August 21 with the brand’s full suite of networks and services available. At launch an enhanced ESPN App will be introduced on mobile and connected TV devices.
“Key new features planned launch include multi-view, enhanced personalization, integration of stats, betting, fantasy sports and commerce, and a personalized SportsCenter, and we will continue to innovate post-launch,” Iger said Wednesday.
The unlimited ESPN app package will cost $29.99 per month, with a slimmed down version available for $11.99 per month. There will also be a special launch offer of $29.99 per month for the first year for subscribers who bundle the ESPN unlimited plan with Disney+ and Hulu.
During Disney’s fiscal year 2025 third quarter ESPN’s domestic revenue was up 1% year-over-year to $3.93 billion, but quarterly domestic sports segment operating income of $1 billion was down 7% yoy, primarily due to higher programming and production costs related to contractual rate increases for the NBA and college sports. Sports segment domestic advertising revenue was up 3% year-over-year.
Disney’s existing ESPN+ subscriber tally remained flat from the prior quarter at 24.1 million.
Hulu getting fully integrated into Disney+
In the entertainment segment, Disney saw quarterly operating income declines in linear networks and content sales and licensing, but reported direct-to-consumer segment growth and is gearing up to more tightly integrate its digital offerings and experiences – including a full unification of Hulu within Disney+ for a single app experience next year.
Disney’s three-month DTC segment results include a quarterly revenue bump of 6% yoy to $6.1 billion and operating income growth to reach $346 million, compared to a DTC operating loss of $19 million a year ago. Disney said DTC operations benefited from subscription revenue growth on the back for price increases and subscriber growth, as well as a decrease in programming and production costs. The company expects the DTC segment to deliver full-year fiscal 2025 operating income of around $1.3 billion.
In prepared commentary, Disney execs Wednesday said the DTC results demonstrate the “progress we are making to increase our streaming margins and build this business into a core growth driver for the company.”
Also in prepared Wednesday, Iger categorized the planned full Hulu integration within Disney+, which combines content offerings with an eventual phase out of the former, as “a major step forward” in strengthening the Disney streaming offering.
The executive said the combination will “create an impressive package of entertainment, pairing the highest-caliber brands and franchises, great general entertainment, family programming, news, and industry-leading live sports content in a single app.”
The plan is one that has been in the works and comes on the back of earlier beta tests and later full integrations of Hulu and its content on Disney+ for certain Disney Bundle subscribers, where the company previously touted positive results.
Per Iger, integrating Hulu into Disney+ will not only give subscribers more choice and convenience, but will allow the company to grow profitability and margins through expected “higher engagement, lower churn, and advertising revenue potential, as well as operational efficiencies that over time may result in savings that we can reinvest back into the business.”
The Disney+ app is expected to get improvements with new features and a personalized homepage, and the unified Disney+ and Hulu app experience will be available to consumers next year.
As for quarterly results on the subscriber side, Disney+ gained 1.8 million international subs (for a total of 69.9 million) while its domestic base stayed flat at 57.8 million. As of June 28, total Disney+ subscribers stand at 127.8 million. The Hulu SVOD, meanwhile, added 900,000 in the period for a total of 51.2 million. And virtual MVPD Hulu + Live TV lost 100,000 subscribers for a base of 4.3 million.
Next quarter it expects total Disney+ and Hulu subscriptions to increase by more than 10 million over the most recent quarter – with the majority of that coming from Hulu as a result of an expanded deal with Charter Communications.
Take a look at Disney’s subscriber numbers while you can as the company on Wednesday said it will stop reporting paid subscriber numbers and ARPU metrics for Disney+ and Hulu starting with Q1 FY 2026 and for ESPN+ with Q4 FY 2025. Disney said these metrics “have become less meaningful” to evaluate performance of the business and the move follows a trend of other streamers also pulling back on subscriber metric disclosures, including Netflix.
Disney’s entertainment segment operating income totaled $1 billion in the quarter, representing a $179 million decrease compared to the same period a year ago. Total Disney revenues were up 2% yoy to $23.65 billion and total quarterly segment operating income increased 8% to $4.3 billion.