Subscriber numbers for ESPN+ fell once again, while the streaming service also posted a $65 million operating loss, as media giant Disney revealed mixed results for its direct-to-consumer business in the second financial quarter of the year.
ESPN+ subscriptions dropped for the second straight quarter and third time in four quarters, and now stand at 24.8 million – the same level it was at early last year.
With the latest quarter following the conclusion of the 2023 college football and NFL seasons, Disney (which owns ESPN+) pointed to this as one key reason for the subscriber decline.
However, before last summer, ESPN+ showed more than five years of uninterrupted subscriber growth.
For the first time, the Disney+ and Hulu services became profitable in the second quarter of 2024 as they ended the period with a $47 million profit. However, when combined with ESPN+, the business lost $18 million in the quarter.
Disney said its streaming business with ESPN+ will become profitable in the 4th quarter of the year.
Revenue from Disney’s domestic ESPN business was up 4% to nearly $3.9 billion, while the international ESPN arm brought in $341 million, down 7% from last year.
The domestic business also posted an operating loss of $78 million but its international operations remained flat.
Disney said the lower domestic ESPN operating results in the quarter were due to several factors, including “an increase in programming and production costs attributable to higher costs for College Football Playoff programming as a result of airing an additional game in the current quarter due to timing.”
In the current quarter, ESPN aired the championship game, two semi-final games, and one host game compared to the championship game and two host games in the prior-year quarter.
The media heavyweight’s Star India pay-television broadcaster in that country contributed $4.3 billion, up 2% from 2023.
Overall, Disney’s revenues for the quarter increased to $22.1 billion from $21.8 billion in the prior year.
Bob Iger, Disney's chief executive, said: “Our strong performance in Q2 demonstrates we are delivering on our strategic priorities and building for the future. Importantly, entertainment streaming was profitable for the quarter, and we remain on track to achieve profitability in our combined streaming businesses in Q4.
“Looking at our company as a whole, it’s clear that the turnaround and growth initiatives we set in motion last year have continued to yield positive results.”
Iger also stated he was “confident” of concluding a long-term rights renewal with US basketball’s NBA. It was recently reported that ESPN would maintain its "A package" of games, with sister network ABC getting exclusive rights to the NBA Finals in an agreement that will last for at least 10 years.
The NBA is also set to enter the streaming world with a long-term rights deal close to being finalized with online retail giant Amazon for the new cycle.
Iger said of the NBA: “This is a sports product with growth ahead of it, with great demographics. We feel really good about the potential package that we will end up with, basically enabling ESPN to continue to shine in the television sports business.”
Disney also revealed that ESPN will be featured on a tile within Disney+ by the end of the year, with the service to provide access to select live content to US subscribers.
This will come ahead of a full DTC version of ESPN that will debut in the latter months of 2025.
Iger said: “It’s a start of essentially conditioning the audience on Disney+ and Hulu that sports are going to be there.”
Disney+ is set to make its live sports debut with a pair of games from the women's WNBA.
The double-header on May 14 will include Caitlin Clark’s first regular season game for the Indiana Fever against the Connecticut Sun and the Phoenix Mercury’s encounter with the Las Vegas Aces.
Both games will also be available on ESPN+ and the ESPN2 linear channel.
