Disney Plans to Launch ESPN Streaming Service: Report

Disney is "actively preparing" for a shift that would let ESPN become a standalone streaming service, the Wall Street Journal reported Thursday.

The shift, the timing of which hasn't been decided, will have a profound impact for the entertainment giant and the broader television business, according to the Journal. ESPN has long been one of the main attractions for a cable bundle, as ESPN gets a $9.42 slice of the average cable TV bill -- it collects fees from cable providers for each customer -- compared with an average of of 49 cents per subscriber for other U.S. cable networks, per S&P Global Market Intelligence.

Executives at ESPN and parent Disney have for years known the move to a standalone streaming service was inevitable. As consumers continue to cut the cord, Disney has named the project with the code name "Flagship."

ESPN will reportedly continue to offer the TV channel after launching a streaming option. ESPN already has a sports streaming app called ESPN+, but it doesn't offer access to the full channel, which includes high-value programming such as the NBA and NFL telecasts. The sports-media giant stepped into streaming with ESPN+ in 2018, and the service has since grown to 25.3 million subscribers.

"It's a huge decision for us to make, and we know that we've got to get it right in terms of pricing and timing," Disney CEO Bob Iger said earlier this month.

All large media companies face the shift from the traditional TV business, which has been lucrative for decades, to a streaming world that's increasingly competitive in the fight for eyeballs. There's already competition in sports streaming as Apple and Amazon scoop up sports-media rights for NFL and MLB games. More recently, Google's YouTube paid about $2 billion a year for the NFL's Sunday ticket package of games.

ESPN has long been a profitable business for Disney, but cord-cutting has driven an 11% decline in households with access to ESPN via traditional cable packages since 2019. About 74 million households had access to ESPN as of last September. In the most recent quarter, income from Disney's traditional TV networks, including ABC and ESPN, fell sharply to $1.8 billion, from $2.8 billion in the year-earlier quarter.

Earlier this year, Iger said the industry was in an "interesting transition period" that would eventually gravitate to streaming. However, he said the company wasn't going to abandon its traditional platforms that were still providing a benefit to the company.