Daniel Loeb’s Third Point has taken a new stake in Disney, pushing the entertainment giant to spin off its sports network ESPN, according to a letter obtained by CNBC’s David Faber.
The shares jumped as much as 2% on the news. Loeb’s stake is worth roughly $1 billion, Reuters reported Monday.
“ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting,” Loeb said. “We believe that most arrangements between the two companies can be replicated contractually, in the way eBay spun PayPal while continuing to utilize the product to process payments.”
Disney is making more money from cable subscribers than any other company solely because of ESPN. ESPN and sister network ESPN2 charge nearly $10 per month combined, while Disney requires pay TV providers to include ESPN as part of their most popular cable packages.
At some point in my life I would LOVE to be apart of a hostile takeover. There is probably nothing cooler a dink investor can aspire to be than a "corporate raider" and that is apparently what this guy, Dan Loeb, is trying to do with Disney. Buy it up and then break up the pieces. A power move.
I am here for it. ESPN has been on a bad path for a long time now, in my opinion. The shows that used to drive engagement and sports culture are dead and almost entire gone. You've got Scott Van Pelt and the College Gameday crew and that is about it in terms of palatable programming. Baseball Tonight, the original sportscenter, and all the other shows have been replaced by what largely feel like political talk shows. This is not a "shut up and dribble" take. Athletes and media personalities have all the audience and platforms they could ever dream of with social media these days. I just don't need ESPN to cover those topics. Everything in our culture feels political now and it would be great if ESPN returned to 1990s version of ESPN where it was live sports, sports commentary, and highlights. Sports always make me mad, but I just want to a place to be mad about sports. Not because sports are merging with politics.
Now, none of that is guaranteed if ESPN were to be spun off, of course. It just feels more possible than it would if they stayed under the Disney umbrella. Maybe in general all of these M&As that have basically given every single product to like 12 companies isn't a good thing. Break them up. Get better competition. Make ESPN less serious.