In a long-percolating agreement, ESPN said that it has acquired the NFL Network and certain other media assets of the NFL in exchange for a 10% equity stake.
The agreement, announced Tuesday on the eve of Disney’s quarterly earnings report and in the runup to the NFL season, will give ESPN important new programming for its forthcoming stand-alone streaming service. One of the marquee assets involved in the deal is a set of seven regular-season NFL games, which had been exclusive to the league-owned channel.
Disney has been in business with sports leagues before, acquiring Major League Baseball’s tech arm several years ago and using it as the foundation of its direct-to-consumer streaming push. But the notion of the most powerful sports entity of all, at least in the U.S., owning 10% of Disney’s foundational sports division represents a major breakthrough.
In addition to the sale of NFL Network, the NFL and ESPN are also entering into a second non-binding agreement. Under that pact, the NFL will license to ESPN certain NFL content and other intellectual property to be used by NFL Network and other assets.
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The deal also includes a provision in which ESPN will own broad rights to the RedZone brand and distribute the NFL RedZone channel to pay-TV operators. The NFL will continue to own, operate and produce the channel and keep digital rights, according to ESPN.
The launch date and pricing for the new ESPN streaming service are likely to be announced as soon as Wednesday morning, and the presence of the additional NFL content will be a sweetener for the service. NFL Fantasy is also included in the deal, which will help with ESPN’s effort to leverage its appeal to fantasy sports players. ESPN’s fantasy game will now be the official NFL fantasy product, enhancing its clout in the marketplace.
“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,” Disney CEO Bob Iger said. “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.”
In the official announcement, Goodell praised the run of the NFL Network, which launched in 2003. It had initially been a headache for the league as a number of major pay-TV providers balked at paying steep fees in order to carry it, leaving gaps in its distribution footprint. Once it was fully distributed, the network enjoyed only a brief peak period before the pay-TV bundle started to fray due to cord-cutting and the streaming revolution, making traditional network assets less appealing to their owners.
“Whether it was debuting Thursday Night Football, televising the [NFL] Combine, or telling incredible football stories through original shows and breaking news, NFL Network has delivered,” Goodell said. “The network’s sale to ESPN will build on this remarkable legacy, providing more NFL football for more fans in new and innovative ways.”
Jimmy Pitaro, chairman of ESPN, called it “an exciting day for sports fans.” Putting NFL media assets together with ESPN’s capabilities, he said, is “creating a premier destination for football fans. Together, ESPN and the NFL are redefining how fans engage with the game – anytime, anywhere. This deal helps fuel ESPN’s digital future, laying the foundation for an even more robust offering as we prepare to launch our new direct-to-consumer service.”
The transactions are subject to the parties’ negotiation of definitive agreements, various approvals including by the NFL team owners, and customary closing conditions, an announcement said.
ESPN is 80& owned by Disney’s ABC Inc., with the Hearst Corp. controlling the remaining and 20%.