NFL takes 10% stake in Disney's ESPN, which will take over the NFL Network

The NFL has reached a deal to take a 10% ownership stake in the Walt Disney Co.’s ESPN, a move expected to solidify the sports media outlet’s relationship with the league for years to come.

Disney and the NFL announced the blockbuster arrangement Tuesday night.

In return for the equity stake worth more than $2 billion based on recent valuations of the network, ESPN will take over the NFL’s cable properties including the NFL Network. Disney will distribute RedZone, the popular channel that continuously updates fans on the slate of Sunday contests.

The NFL Network also has the rights to seven regular season games — giving ESPN a larger slice of television’s top ratings draw.

The arrangement comes two years after Disney began evaluating options to maximize ESPN amid the fast-changing television landscape. The Burbank giant did not have to look much further than its most dominant programming partner.

In addition to the sale of NFL Network, the NFL and ESPN are also entering into a second non-binding agreement, under which the NFL will license to ESPN certain NFL content and other intellectual property to be used by NFL Network and other assets. ESPN now owns the RedZone trademark and can use it for other sports.

The deal is a big win for ESPN Chairman Jimmy Pitaro, who took over the Disney unit in 2018 with a mandate to improve the company’s relationship with the NFL.

The equity stake comes ahead of ESPN’s move into the direct-to-consumer streaming business this fall, which gives consumers the opportunity to purchase the company’s sports channels without a cable or satellite TV subscription. NFL Network will also be available on the streaming service.

“This is an exciting day for sports fans,” Pitaro said Tuesday in a statement. “By combining these NFL media assets with ESPN’s reach and innovation, we’re 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 new product is aimed at recapturing sports fans who are forgoing cable and satellite services. ESPN has seen its reach in cable decline from 98 million homes in 2013 to around 72 million as a result of cord-cutting.

“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 Chief Executive Bob Iger said in a statement.

Read more: Can ESPN survive while cable TV dies?

ESPN has the broadcast rights to “Monday Night Football” and two Super Bowl games in the current NFL contract that runs through 2033 but is expected to be reopened in 2029.

The NFL also recognized that millions of consumers no longer pay for cable channel bundles, which has cut into the distribution of the NFL Network. The deal with ESPN will provide the league with another potent conduit to reach its fans.

“Since its launch in 2003, NFL Network has provided millions of fans unprecedented access to the sport they love,” NFL Commissioner Roger Goodell said in a statement. “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 deal with Disney means the NFL’s other partners — Fox, NBC, CBS, YouTube and Amazon — will be bidding against an entity that the league has a financial interest in the next time that media rights come up.

Lachlan Murdoch, executive chairman of Fox Corp., told Wall Street analysts Tuesday he is not concerned the NFL’s partnership with ESPN will impact his network’s standing with the league.

“We have a tremendous relationship with the NFL,” Murdoch said. “We appreciate that they are fans of the broadcast and cable networks, and we look forward to working with them and deepening our relationship with them as we move forward.”

Times staff writer Meg James contributed to this report.

This story originally appeared in Los Angeles Times.

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