ESPN considers adding sports leagues as partners as it transitions from cable to digital

ESPN chairman Jimmy Pitaro says the network could take on a sports league as a minority partner as the network continues its transition from a cable channel to a digital company

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ESPN chairman Jimmy Pitaro said the network could take on a sports league as a minority partner as the network continues its transition from a cable channel to a digital company.

“I will emphasize that we believe there are parties out there that can help us on the content side. So you can draw whatever conclusions you want from that,” Pitaro said Tuesday during a seminar sponsored by CNBC and Boardroom, a sports media company founded by Kevin Durant.

Pitaro declined to say which leagues have been in talks with him and Walt Disney Co. CEO Bob Iger, but he said there has “been a healthy level of interest” from leagues as well as technology, marketing and distribution companies.

Pitaro also said it is not a question of if but when ESPN will roll out a direct-to-consumer product to view its offerings.

A league having an equity stake in a network like ESPN would be groundbreaking and would pose some questions about fairness and objectivity in coverage. It would mark another step in sports’ relationship with its broadcast partners.

Some teams have equity stakes in regional sports networks, while all four major U.S. professional leagues have their own channels.

Some have also wondered about ESPN’s future within the framework of Disney, which Pitaro tried to address by saying, “Bob (Iger) has been clear about the power of live sports and power of the ESPN brand, how important it is to the future of the Walt Disney Company.”

With cable audiences continuing to shrink, a direct-to-consumer option would help recoup some financial losses. According to its most recent filing, ESPN has 72.5 million cable subscribers and 25.3 million for its ESPN+ streaming service.

There is no timetable for ESPN releasing a direct-to-consumer product, which would give consumers a way to view programming from ESPN's channels without a cable subscription. ESPN+ subscribers currently still need a cable subscription to access that content.

LionTree Chairman and CEO Aryeh Bourkoff said it would be tough for ESPN to go it alone as it transitions from linear to digital and that partnerships have become as crucial for businesses as much as mergers and acquisitions.

Bourkoff compared ESPN’s transition to Netflix's move from a DVD-by-mail service to streaming, and Amazon expanding from online book sales into Prime Video and its own branded products.

“You are shifting from a linear model that has existed for a long time to a model where digital and technology companies are all competing against each other,” Bourkoff said. “You have to be properly aligned. I think there’s a way to bring all that together that preserves the upside but also cash flow. I think people have to come together to make this happen.”

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