Disney Headlines for August 27th, 2023
This week: Disney may get the lifeline it needs for a cash grab, while the company decides to double down on the Florida Feud.
Disney Headlines sure have taken a turn since the start of 2022, haven’t they?
How about No?
In poker, when you’re in a hand and raise the bet, your opponent has three options. They can call, fold, or re-raise.
Ron DeSantis openly tried to persuade Disney to fold its hand in the ongoing Reedy Creek Improvement District squabble.
Florida’s governor recently appeared on CNBC and suggested that he had moved on from the feud.
DeSantis then waited anxiously until Disney got back in touch. Your favorite theme park then emphatically re-raised the hand.
Here’s what happened. The new Central Florida Tourism District (CFTOD), which is already embroiled in controversy, requested that a Florida judge dismiss some charges.
In case you missed the story, the CFTOD knew the judge wouldn’t drop the lawsuit entirely. This legal maneuver is merely an attempt to narrow the scope.
DeSantis wants his name off the records here because he’s worried he might lose.
To a larger point, the Florida Feud hasn’t tested well on his Presidential campaign. He wants out.
ESPN Sports Center used to describe this behavior as drooling the drool of regret into the pillow of remorse.
Disney CEO Bob Iger had previously indicated a willingness to meet with DeSantis to settle the squabble.
The governor figured he would skip a step and ask that Disney just drop the whole thing.
Disney Escalates the Feud
Well, Disney has countered, and it’s…aggressive. For starters, Disney has asked the same Florida judge to rule in its favor.
This argument stems from Florida’s attempt to overlook existing agreements by writing new ones.
Specifically, the CFTOD’s curious claim is that Disney violated the mandated rule that it honor the Sunshine Law, which we know isn’t true.
Disney met the Sunshine Law requirements by:
- Giving reasonable notice that the meeting would occur
- Opening the board meeting to the public
- Taking the minutes of the meeting
The CFTOD hopes that a judge may feel that since nobody noticed Disney did it, the action didn’t count.
That’s the point we’ve reached with this nonsense. We’re basing legal arguments on the semantics of “If a tree falls in the forest…”
Disney’s filing specifically argues that it did everything right and thus should win the suit immediately.
Obviously, that’s a legal tactic, but it’s somehow perceived as not desperate like the move CFTOD performed.
That’s because both parties agree to the details about what happened.
Reedy Creek officials wrote laws that established terms for Walt Disney World into the early 2030s.
Then, Florida’s gerrymandered government followed DeSantis’s wishes in writing new legislation that supersedes what Disney did.
Now, Disney has filed an even more aggressive request. Specifically, the company seeks punitive damages because the CFTOD has breached existing contracts.
That’s pretty much a declaration of war right now. Disney is stating that it not only feels wronged but now wants the CFTOD to pay for its actions.
In other words, Disney heard the governor ask, “Hey, can we drop this?” Their legal reply signals the equivalent, “ABSOLUTELY NOT!!!”
Now, we face another wave of headlines like, “Disney Doubles Down on Florida Litigation Against Ron DeSantis’ Board as Governor Signals White Flag.”
ESPN Bidding Gets Interesting
During the recent Disney earnings call, Bob Iger indicated that he had no interest in selling ESPN.
Instead, the CEO envisioned a scenario wherein ESPN would create a next-generation licensing agreement with various professional sports.
Since ESPN stands as the Worldwide Leader in Sports, it makes some sense for leagues like the NFL, MLB, NBA, and NHL to join such a venture.
Realistically, those sports leagues earn so much revenue from licensing agreements that the deal may not be in their best interest, though.
The NFL signed a contract extension that doesn’t even begin until 2024, while the NBA expects a massive rate increase from its current deals.
NBA programming currently airs on ESPN and Turner Sports, a division of Warner Bros. Discovery (WBD).
Between Disney and WBD, we’re talking about two companies that want to cut costs on their programming, especially linear.
Currently, WBD’s Max cannot even stream live sports. The corporation claims that technology will arrive this fall.
Meanwhile, Disney has indicated that ESPN won’t go fully over-the-top (OTT) until 2025. That’s the same year its current NBA agreement expires.
Disney and WBD fear they won’t be able to afford the next agreement because of something I’ve referenced in the past.
Yes, I sadly mean the IPL cricket streaming rights that Disney lost last year. Since then, Disney+ subscriber numbers in India have collapsed.
Imagine ESPN if it lacked the live sports of basketball and football. That idea doesn’t seem far-fetched in the wake of the collapse of the Pac-12.
New entities want to grab these rights, and they have deeper pockets. For example, the final bidder for the now-defunct Pac-12 was Apple.
Apple desperately wants more live sports, which leads us to the other Headline emerging this week…
Verizon Negotiates for ESPN
We’ve got two competing Headlines about the same subject.
The first is that Verizon has expressed interest in licensing ESPN content.
That’s like the richest person you know suddenly offering to invest in your business.
This deal would come on the heels of a previously successful agreement between the two companies, one involving Disney+.
Verizon claimed revenue of $136.8 billion in 2022 and has nearly 150 million customers. It can keep all those people by offering live sports on a Verizon phone for “free.”
Verizon would monetize the expense by either enticing more customers thanks to the ESPN content or raising rates a meager amount to pay for it.
Meanwhile, Disney gains a LOT of money for its ESPN product, which faces an uncertain future due to the collapse of linear television.
Still, there’s something else who might make more sense as an investor in ESPN…or even a buyer.
Apple Makes More Sense
Some analysts believe that Apple will seek out a deal for ESPN content.
Alternatively, Disney could sell ESPN to Apple for – wait for it — $50 billion!
From a meta-perspective, that deal would basically mean Disney exchanges ESPN and the rights to the former Regional Sports Networks (RSN)s for Fox and about $20.7 billion.
As a reminder, Hearst owns 20 percent of ESPN and would get $10 billion from this entirely theoretical $50 billion purchase.
Still, a trade of ESPN and $20.7 billion for Fox is…pretty good.
Even so, I don’t think Disney wants to sell ESPN. Even if it would, the antitrust concerns could kill the deal.
The underlying mechanics of an Apple investment in ESPN make much more sense for all involved.
After all, Apple’s bankroll makes Verizon’s look like yours or mine. While Verizon sells the cellphone service, Apple makes the phones.
Apple sold 225 million iPhones last year and claims 1.46 billion users.
Imagine the value of all those people gaining ESPN access via an iPhone.
As such, I presume Apple is Plan A for Disney, while the sports leagues are Plan B, and Verizon is Plan C and probably the bird in hand.
Why should you care about these two stories? That one is simple. If Disney wins its CFTOD lawsuit, it can do whatever it wants with that land.
Yes, that means theme park expansion!
Do you know what would pay for that expansion? Verizon and/or Apple money.
Folks, these stories connect, and I suspect this really could happen!
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Feature Photo: Getty Images