BofA Global Research estimates that Walt Disney's ESPN sports network could fetch an enterprise value of $24 billion and draw attention from telecom majors like Verizon, sports leagues, and tech companies like Apple.
The media behemoth announced ESPN's dwindling revenues and profit last month in an attempt to entice an outside investor. ESPN is thought to be the crown jewel of the company's traditional TV business.
According to CEO Bob Iger, Disney intends to preserve ESPN and will strive to develop a streaming app for it through joint venture formation or the sale of a minority interest in the network.
According to a note written by BofA analysts led by Jessica Reif Ehrlich on Wednesday, this implies that a 36 per cent share in ESPN would be up for sale, assuming Disney plans to keep a 51 per cent majority interest and accounting for media giant Hearst's 20 per cent investment.
According to the memo, potential partners might include distributors like Verizon and Comcast, upstarts like Apple and Amazon.com who are vying for a piece of the live sports market, and leagues like the National Football League and the National Basketball Association.
Disney would benefit greatly from the transaction since, according to the brokerage, ESPN would be able to focus on high-growth streaming, expand its products, and maintain the possibility of a spinoff with additional funding.
The linear television industry has been negatively impacted by growing cord-cutting, and obtaining sports rights has gotten more and more expensive—future sports rights are predicted to cost upwards of $69 billion.
The benefits to prospective buyers appear to be unclear, and the risk-reward tradeoff is now unfavorable, BofA said.