After once saying that the linear TV business “may not be core” to Disney, CEO Bob Iger has completely changed his tune, telling Wall Street on Wednesday that the entertainment giant has now reached a point where its networks are “not a burden at all.”
“We are programming them and we are funding them at levels that actually give us the ability to enhance our overall television business that obviously includes and leans into streaming, which, let’s face it, is really the future of the television business,” he said. “I won’t rule out the possibility some of the smaller networks in some form or another being configured differently in terms of how we bring them to market — maybe even ownership — but we’re not right now. We actually feel good about the hand that we have and the manner in which we’re managing both the linear and the streaming businesses across the board.”
Iger’s comments come as Disney competitor Comcast has unveiled plans to spin off its cable network portfolio into a standalone, publicly traded company. Analysts and industry executives have previously told TheWrap that the entity, currently dubbed SpinCo, could serve as a roll-up vehicle for other companies’ distressed linear TV assets.
Disney has previously showed a willingness to drop some of its smaller cable networks in carriage negotiations with pay TV operators, with its 2023 agreement with Charter Communications allowing Spectrum to drop Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo.
It also reached a carriage deal with DirecTV in September that would allow the satellite TV operator to introduce genre-specific package options, such as sports, entertainment and kids & family – inclusive of Disney’s linear networks along with Disney+, Hulu and ESPN+.
“I can’t predict whether the emergence of these skinnier bundles is going to have a material impact on cord-cutting or not, except to say that we plan to take advantage of the emergence of these bundles, because it is a great way to distribute ESPN,” Iger added.
In its first quarter of 2025, Disney’s entertainment linear networks revenue fell 7% year over year to $2.62 billion and operating profit tumbled 11% to $1.1 billion. Domestic linear revenues and operating income were flat year over year at $2.2 billion and $837 million, respectively.
Operating income was flat due to an increase in programming and production costs, a decrease in affiliate revenue due to fewer subscribers, lower technology costs and higher advertising revenue due to more political advertising at its owned TV stations, partially offset by fewer impressions due to lower average viewership. International linear networks revenue fell 31% to $411 million, while profits fell 39% to $138 million, primarily due to Star India’s $8.5 billion merger with Reliance Industries.
Linear ESPN saw revenue grow 8% to $4.81 billion, including a 9% increase to $4.42 billion domestically and a 7% increase to $389 million internationally. Operating profit grew 15% to $228 million, as international ESPN narrowed its losses 95% to $3 million and domestic fell 9% to a profit of $231 million.
The decrease in domestic operating income was due to higher programming and production costs from expanded college football programming rights, higher ad revenue, sub-licensing fees from college football playoff programming rights and comparable affiliate fee revenue to the prior-year quarter, offset by fewer subscribers.
Meanwhile, Disney+ and Hulu reported a combined profit of $293 million during the quarter, compared to an operating loss of $138 million a year ago, and saw revenue grow 6% to $6.07 billion.
The improvement in operating income was driven by subscription revenue growth from price increases, higher technology and distribution costs, higher subscriber-based programming fees at Hulu + Live TV due to rate increases, lower sports programming costs at Disney+ and lower advertising revenue at Disney+ Hotstar that was offset by higher ad revenue at Disney+ core and Hulu.
Disney+ launched an ESPN tile in December. On Wednesday, Iger said the company would add more live programming to the service as it looks to increase engagement.
“We have the advantage of not only a menu of sports and sports programming that no one else has, but we’re on 365 days a year, 24 hours a day,” he said. “So if you’re a sports fan, it’s not about one day of one boxing event or one day of football. It’s about sports every single day of the year and every hour of the day. And that’s a pretty compelling consumer proposition.”
Disney also plans to launch a fully direct-to-consumer version of ESPN, internally codenamed Flagship, in early fall 2025. The in-app experience for Flagship will package the network’s sports programming with fantasy sports integrations, enhanced statistics, betting features and e-commerce.
“Young consumers are leaning more and more into streaming experiences, both fixed televisions on walls and mobile devices, and the more ESPN can be present for a new generation of consumers with a product that serves them really well, the better off ESPN business is,” Iger said. “So Flagship is not really designed to preserve a business. It’s designed to grow a business in a market that’s evolving or changing right before our eyes. So we’re extremely, extremely excited by what’s coming, and bullish about it, because we think it’s not only a good business proposition, but it’s a sports fan’s dream.”
In January, Disney also revealed it would acquire a 70% controlling stake in Fubo. The move came as part of a settlement to clear the way for the launch of Venu Sports, though the joint venture with Warner Bros. Discovery and Fox was scrapped last month.
If approved by shareholders and regulators, Fubo will merge with Disney’s Hulu + Live TV offering to create the second largest virtual multichannel video programming distributor (vMVPD) behind YouTube TV and the sixth largest pay TV operator, with 6.2 million subscribers in North America.
Fubo will remain available as a standalone offering and continue to be publicly traded. Through an amended carriage agreement, it will also offer a new sports and broadcast service that includes content from ABC, ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS and ESPN+.
“This was a great opportunity for us to make ESPN available in multiple skinny bundles, and then to actually merge the Hulu Live and the Fubo Essential channel business as one, because, frankly, while we like being in that business, it wasn’t a core business to Hulu,” Iger said. “This gives us the ability to actually enhance the Hulu Live experience, because the combined entity, when it’s approved, will spend more time, put more resources into the user interfac, and essentially make the former Hulu Live experience better for consumers.”
