Thanks, Jimmy, for joining us. I want to start with what I consider to be the existential question of ESPN. You are operating in a world now where the cost of sports rights, major sports rights, keeps going up, and cable subscribers keep going down. It's not really much you can do about that. You're part of a larger ecosystem. I know you have a lot of priorities. You've talked about this before. It strikes me that there's a world where you can do all of those things, but there's a general acceptance from you and Bob Iger, your boss, that the new normal is an ESPN that's simply not as profitable as it once was. Are you okay living in that world? Well, we're navigating through a storm. We all know people are cutting the cord at a higher clip than they have in the past. If you look at the past few years, 7, 8% fewer households

watching television, that's a great business model. It has been a great business model to ESPN and to The Walt Disney Company. And when that business model is in decline, you have to adjust, and that's what we're doing right now. So you, we just talked about our priorities. We do not call out revenue or operating income as a core priority. You know, if I'm standing up on a stage at an ESPN town hall, I'm not going to show a slide that shows revenue and profit as a priority. But if we deliver against those four priorities that we just talked about, I do believe that you will see ESPN growing from a revenue NOI perspective, but we have to execute. So quality storytelling and programming, we just closed our NBA deal, okay. Now, if that deal delivers for us in terms of growing our ratings, growing our reach, we got flagship

rights. If it delivers internationally, we got international rights. We should see an uptick. And so. An uptick in what? In financial performance. Now, you're talking about a world where we were seeing significant growth. Like call it a decade ago where we were seeing significant growth, because of that cable or satellite business model. Fast forward to today, and we're seeing we're seeing declines. And so we are not sitting idle here. Bob and I talk all the time about disrupting ourselves, which is what we are doing right now. You know, we're planning on launching our primary channels direct to consumer, à la carte, over the top, right around this time, next year. And that will be even more disruptive to that traditional ecosystem, but from my perspective, we are going to value ourselves based on the totality of people that are subscribing to ESPN.

And so there are parallel paths going here, right? We will continue to make our content available in the traditional ways through cable and satellite, and that will continue to be an important part of our business. But at the same time, we will make our flagship network, our networks, available direct to consumer, and then we're going to evaluate ourselves, judge ourselves based on the totality of subscribers. So you've got ESPN, traditional ESPN that you get through the cable bundle, you've got ESPN+, which exists now. Correct. You're going to be launching ESPN flagship around this time next year. There's this venue thing, the joint venture you have with Warner Brothers and Fox, that may or may not exist, depending on legal concerns, but that's another potential way of getting ESPN. It strikes me that particularly this flagship product that you're building, that you may get new insights from a direct to consumer relationship.

that you haven't previously got in the old wholesale. Yeah, that is direct to, that's one of the benefits of being direct to the consumer. So in that world where all of those products exist, would you prefer that a customer is a flagship user and customer, rather than those other ways of getting ESPN? We're somewhat agnostic. Right, there are pros and cons, you mentioned one of the pros of going direct to consumer. You have access to the customer. You have access to the data. You can take that data and create a more personalized experience for the sports fan. However, that traditional world is really good to ESPN and it's really good to The Walt Disney Company. There's also less churn in the traditional world, so we all know sports are seasonal, and so one of the concerns that we have, with the direct to consumer model is churn. It's also one of the benefits.

Sorry, I keep going back to this NBA deal, but one of the benefits of that deal is it's an NBA and a WNBA deal. So we will have professional basketball just about year-round here, and that will significantly help address the churn concern that we have. So since you brought up the NBA deal, let's talk about it. You're spending $2.6 billion a year now, roughly. Right? That's the number that's been reported. Previously, that was something more in the $1.4 billion per year number. That's the number that's— So, that's a lot more. So, explain to me why you think you got a good deal. Okay, first off, we went into this, and we made it very clear to Adam and Bill Koenig that maintaining exclusivity around the finals was really important.

to us. And they delivered for us. We have complete exclusivity around the NBA finals for the 11-year deal. Also, for ten of the 11 years, we have one of the conference championships. That was also important to us. We were able to acquire rights for flagship, so we have all the digital rights that we need, and I mentioned before international rights potentially for Disney Plus. So, in its totality, we feel really good. I mentioned the churn point. WNBA is obviously ascending, but we also believe that the NBA is ascending. There's Adam has talked about this, there's a ton of parity in the league right now. I know the Celtics seem to be dominating, they're three and zero right now, and they're looking really good. But in general, if you look across the NBA, there's more parity, I think, than there has been in a long time.

And you also have younger talent that are emerging, that we're pretty excited about. So, yes, we feel like this is very valuable marquee content. It's a cornerstone property for us. Were you happy that the WNBA was baked into that deal? Because it strikes me that given its ascendance, if they had carved that out and done it separately, maybe they would have gotten more money. So maybe you got a good deal. We would have bid on it independently. I don't know if I'm happy about it. It did make the process easier, but we made it very clear to the league executives that we were very much interested in extending, renewing on the WNBA side as well. You have a lot of different responsibilities as any person that runs a major media company does. So you've got these major rights deals, you have

talent negotiations. You're traveling quite a bit. You're getting briefings on research. Yeah. Can you walk us? And by the way, also, you're now a succession candidate for the Disney CEO job, so that comes with its own responsibilities. Let me just pause there for a second. Has that been a distraction at all? Look, we have a pretty robust roadmap, and so my job is to keep my head down and deliver for ESPN, deliver for the sports fan, deliver for the Walt Disney Company, and that's what I'm doing. I love my job. I'm a huge sports fan. I spent years competing against ESPN. Then I spent years sitting at Bob Iger's table hearing from ESPN leadership and grew to really like and respect this place and its culture. So, I wake up every morning and I say, I have to earn this job, and I really mean that.

I know how fortunate I am to be in this chair leading ESPN, and I couldn't be more excited about the roadmap that we have in front of us. So part of what I want to do in general, what we want to do as CNBC in general with the CNBC sport venture, is take people inside the business of it, the management of it. So I listed a bunch of things there. Can you walk me through how you set your day? Like how do you prioritize on a day-to-day basis with all of those different things you have to do? So it's been I've been at Disney for 14 years. I've half of that time has been at ESPN. And so if you fast forward to today, my days are very different than they were when I first started at ESPN. When I first started, it was learning the culture, really understanding the business, building relationships with the leagues.

That was a huge priority of mine out of the gate, making sure that ESPN+, which launched one month after I started, making sure that that was a success. A big part of my background has been tech, so I felt like I could add a lot of value out of the gate on the ESPN+ side, so that was a huge part of my focus. But again, fast forward to today, my days are very different. I'm thinking much more about audience expansion. I'm thinking more long term. I'm thinking about how younger people are accessing content today, especially sports content. How invested should we be on third-party platforms like social, and making sure that our resources are going towards the right initiatives, working on our five-year plan, our ten-year plan. And then I'd say probably my number one priority, and where I'm spending the most time now, is on flagship.

And the product enhancements that will come along with flagship when we launch. So, a lot of people think about flagship, Oh, I'll be able to just buy ESPN1 and ESPN2 and ESPNews Direct. Yes, you will, but on top of that, you're going to get some significant product enhancements. And again, I spent a decade at Yahoo, part of which was running Yahoo sports, and a huge part of my focus was on digital product. And so today, we're, I'm surrounding myself by really good product people, really good technologists. We just hired Adam Smith, over from YouTube, and he's leading our tech and product teams. I'm spending a ton of time with those folks, making sure that when we launch flagship direct to consumer, that it's not just flipping the switch, it's creating the best product experience imaginable for the sports

fan. You talked about the increased personalization of the flagship app. Is there one innovation that you're particularly excited about consumers being able to use? So, if you look at personalization at a high level, it means a bunch of things. So, for example, you will have betting integration. So, imminently, we are going to allow you to link your ESPN and ESPN BET accounts. Once you do that, there will be an ESPN BET module, across our digital pages, our digital ESPN pages, that will show you your bets from ESPN BET. When we launch flagship, that module will appear right next to the live broadcast. So, that's one example. Game-specific bets. Not all your bets. Exactly right, so contextually relevant bets. So, if you're watching the Giants on Monday Night Football, and you've placed a bet on the Giants, that will show up. Correct.

Also, let's stick with that Giants example. If you have Daniel Jones as your starting quarterback, your Fantasy, on your Fantasy team, your Fantasy results will show up right there. I would also call out a personalized SportsCenter. So, I have long wanted a personalized SportsCenter, long before I even got to ESPN. And we are hard at work on this right now, so I am a Yankees, Giants, Knicks, Rangers, Notre Dame fan. And so when I fire up SportsCenter, if those teams had played the night or day before, I want to see those highlights first. And then you have kind of lowest common denominator highlights after that. And so we are hard at work on that, talking to potential partners on the outside to help power this. This is so it's an AI-driven SportsCenter. Exactly right. So, there's some third-party voice that

says, Hello Jimmy. So, we have not yet decided on what the voice narration will be. It could be in partnership with some of our talent, or it could be separate. We have not locked in on that yet. One thing that comes to mind, because HBO had this problem when HBO had HBO Max, HBO GO, HBO Now, there was customer confusion. Yeah. Are you focused on when you launch flagship, and you've got ESPN+, and ESPN and the cable bundle, and maybe venue, that customers are going to get confused. What do I need to buy? What don't I need to buy? What comes with my cable subscription? What doesn't? Yeah. Look, it's a very fair question. I will say, as I sit here today, you can buy ESPN in over 600 ways around the country like we are, if you include all of the MVPDs that offer ESPN, there are

just in my neighborhood in Connecticut, there are so many different ways to access and purchase ESPN today. But, at a high level, I'll call out and we talked about this. You have ESPN+, which is more of a niche service, although it's gotten more broad as the months have progressed, but on one end of the spectrum is ESPN+ on the other end of the spectrum is an MVPD or digital MVPD. We want to, our mission is to serve the sports fan, and that means across platform, and across price point. And so we believe that there is an opportunity somewhere in between those products. And so that's where flagship falls. Now from our perspective, when you start to see the marketing of flagship, you'll see us really go after the people that are on the sidelines right now. There are 50, 60 million households today, as you know, that are not participating in the pay TV

universe. And so we would love to get those folks, and a big chunk of them are sports fans. We would love to get those folks off of the sidelines and into flagship. And I would say the same thing for venue. So flagship is not going to be called flagship, right? When it launches, that's a code name. Correct. $25 to $30 a month, does that sound right to you? Look, we're actually in market right now doing research, and we just have not locked in on it. Unfortunately, the research that we've done thus far has been inconclusive, but we're hard at work. What's inconclusive? Where the sweet spot is in terms of price point. I see, okay. I want to talk about talent strategy. You guys just signed Shams Charania. He was a newsletter Q&A guest a couple of weeks ago.

But you've also let go of a number of high-profile people. Zach Lowe and a whole bunch of people a little while ago. Yeah. What is your North Star in terms of deciding? Does this person fit with the mission, or does this person not fit with the mission going forward? Look, a lot of the changes that we've made on the talent side in terms of role elimination have been financially driven. You know, I can't tell you that we've let go of any talent based on performance. You know, that has happened, you know, over the years, but I think the changes that you're referring to, those have mostly been driven by financial considerations and not performance. But you mentioned Shams, there you know we brought on Jason Kelce. We brought on Shannon Sharpe, Bill Belichick is now appearing— These are pricey. Yes— To bring on yeah.

Yes, but they're also needle movers. And so, we have a really good talent department that rolls up to Burke Magnus, who leads our content group. And we do regular research on folks. And we look at folks who we think can deliver, can represent the ESPN brand well, and can move the needle from a ratings or reach perspective. Who are the folks who actually sports fans tune in for? I think Stephen A. is a great example of someone that we see folks tuning in specifically for someone who moves the needle. But at the same time, I will tell you, we have a really deep bench. And one of the things that we pride ourselves on at ESPN is developing talent, you know, identifying talent, and then helping them progress their careers, advance their careers, take on more responsibility. One thing we've seen, I think, from an on-air standpoint in recent years is a migration, and I'm

thinking, Pat McAfee, and I'm thinking, Get Up, and really cross the board with your studio shows, is a migration toward what I would consider to be talking heads, and not journalism in the classic standpoint. And I'm wondering, is that something that you audience tested and figured this is what people want? Is it that journalism is too expensive? It's too hard, like because you do hire a lot of journalists in the classic sense. You just don't see it a lot during the day on ESPN. So look, both things can be true. We can invest in shows like First Take, and Pat McAfee, and Get Up, and we can also invest in quality journalism. I mean, if you look at the stories that our investigative team is breaking on a daily basis, it's incredible. So, I don't accept the narrative that we have deprioritized journalism.

I do accept the fact that we have made bigger investments in folks who we think can help drive our ratings and also, more importantly, help us resonate with a younger audience. Again, if there's one thing that keeps me up at night, it's How does ESPN resonate with younger people, it's one of the biggest reasons why we've made these investments on social platforms, is to extend our brand, and it seems to be working. If you look at our ratings. Going back to the talent strategy, you obviously spent a lot of money to bring Pat McAfee in, you licensed his show. We have an election coming up. Yeah. Pat McAfee has been outspoken on a number of different subjects. Do you feel it's fair, to say, that he is held to sort of a different standard than your other ESPN employees in terms of what he can get away with saying.

on-air? Look, you mentioned it. The show is licensed, and so, we went into this partnership with Pat, understanding that he has creative control over the shows. And we went into it understanding that what is said on that show might make some people uncomfortable. I will tell you that when there have been issues in the past, Pat has been very open to feedback, and he has worked with us, he has heard us out. He wants to win. He, every day, he wants to get better, and I very much appreciate that. If you go back to my point before on audience expansion, and figuring out ways to be more relevant, Pat is the prime example. I mean, if you look at our research, he really does resonate with younger people. And why is that? I think it's because of his authenticity. And so, with that authentic voice, oftentimes you can

have issues that pop up. But when they do pop up, he has been willing to take the feedback. But if he resonates because of his authenticity, and the goal is to expand younger audiences, then why not just have your non-licensed ESPN people be more outspoken about issues? If that's what resonates? Well, let me be clear. So, our mission is to serve the sports fan anytime, anywhere. That's our North Star. So, we need to cover sports, and by the way, that's hard enough, to be really good at covering sports is challenging. And so, what we've said and we have very clear policies in place, and I believe that our talent understands them, and our producers. We're going to cover the intersection of sports and society and sports and politics. Yes, we have an election that is imminent. And so we understand how sensitive it is, especially

right now at this moment in time. But our employees really do understand that we are going to be present when there is this intersection between sports and culture, society, politics, and from my perspective that sports news and we should be there and show up. Well, but as it pertains to just politics, that's not us, like we have really good siblings at the Walt Disney Company, that do that. Have you had any internal communication with people saying, Hey, there's an election coming up, like, you know, I have not personally, but our content team, and our producers are in regular. A reminder basically. Regular conversations, yes. More than a year ago now, Bob Iger went on CNBC, and he talked about potential partnerships with the league, ESPN. Maybe you'd sell an equity stake. I know you've had talks with the leagues.

Where are we? So, Bob said it on the last earnings call. We continue to have conversations in two departments. The first is content, how can we partner to generate, create more content for flagship. So, that's bucket one. Bucket two is what I'll call tech and or distribution. So, when we launch flagship, Are there partnerships out there, not dissimilar to what we had when we launched Disney+ that can help accelerate the adoption of flagship. And so, I and Bob continue to be in. I can't give you names of companies or enterprises that we're in conversations with, but we are still very much in the trenches on those. This idea of potentially selling a small equity piece of ESPN, that's still on the table? I'm not going to get into that. When you launch flagship, would you consider bundling it with other streaming services?

Not the Disney ones, but outside streaming services, in order for it to increase take rate. So, let me back up for a second. So, we are, by the end of this calendar year, going to launch a tile, an ESPN branded title on Disney+. Bob referred to this on the last earnings call as well. And so we're pretty excited about that. Again, serve the sports fan anytime, anywhere, again, audience expansion. How can we expand the brand of ESPN? How can we present our games and our coverage to more fans, especially female fans, especially casual fans? How can we help Disney+ further differentiate, and grow its audience and grow its engagement? Having a tile on Disney+, not dissimilar to what we just did with Hulu, is one of the levers that we're going to pull, and I'm pretty excited about that. It will not be all of ESPN.

It will not be all of ESPN+. If you have not subscribed to ESPN+, it'll be a subset of our content that you will have access to if you are a subscriber to Disney+. Now, also within that tile, if you subscribe to the trio bundle, meaning Disney+, Hulu, and ESPN+, you will get everything that's within ESPN+ within that tile. One last thing on that, when we launch flagship, if you're a subscriber to flagship or a trio bundle that includes flagship, you will have everything within flagship within the ESPN tile on Disney+. So that's part one in terms of— Should I be taking notes here? This is part of the customer confusion thing, right? You're going to need to message this to. So okay, but an ESPN tile on Disney+. That's self-explanatory. Yeah. Yes. Now, in terms of what you're getting, yes we will need to

make it clear to the customer. Okay, but your question I think was broader than that. Like, you understand that we're going to partner and bundle. Could there be a Peacock, ESPN flagship bundle. You know that type of thing. So, in the spirit of your last point, which is confusion, I do think we want to be careful there. Now, again, going back to my point before on the launch of Disney+, fantastic partnership with Verizon, to get that product off the ground, and that was hugely valuable for both Verizon and Disney+, something like that, I have nothing to announce here today, but something like that I can very easily see happening, and that would be great for us, and great for our partner, and great for the sports fan. Endeavor has talked about this. Netflix I know has privately talked about it. Jeff Zucker, when I interviewed him for the CNBC

sport newsletter a few weeks ago mentioned this idea of media companies owning leagues. Is that something that ESPN would ever consider? Instead of renting sports rights, you actually own a professional league, and then you don't need to rent the rights. Look, as I sit here right now, I believe we have the best rights portfolio that we've ever had at ESPN and The Walt Disney Company. In the past calendar year, we've closed the NBA deal, we've closed the NCAA Championships deal, U.S. Open, College Football Playoff, NFL FLAG Football. Like, we're pretty happy with our portfolio of rights. A lot of these deals are long-term deals. Again, apologies for keep going back to the NBA deal, but that's an 11-year deal, and it doesn't start until next season. So, we still have 12 years left with the NBA. So, I believe we're really well situated and set.

up for the next decade with our current rights portfolio. So, you know, look, I've heard the narrative that the media companies today and more and more the tech companies, they're renting rights, they don't own them. And of course, I get that at the Walt Disney Company. So much of our content we own. And then on the ESPN side, we're renting. I will tell you, it's not something that we're looking at or considering right now, primarily because we're so pleased with our rights portfolio. Okay, a couple rights questions. You just laid out a bunch of the rights you've had. I mean, you guys have been really active, I would say, over the past few years of getting these long-term contracts, paying up quite a bit of money for them. And we walked away from some stuff. And you have, so, there's not a lot of real big stuff

coming up in the next few years because it's been locked up. Will you, do you feel like you are in a position now where maybe you will take more of a back seat in the next few years with some of the smaller stuff? I wouldn't say that. I would say, we have a really sophisticated rights and programming team, and a really sophisticated strategy team, and they have a model that takes into account our various revenue streams. So, of course, affiliate sales, and there's ad sales, then there's direct to consumer. Today's ESPN+, it will be flagship. Then there's pay-per-view revenue, and so, for us to do a deal, we need to believe with confidence that it is going to be profitable for us. And so, that is why we have walked away from some deals. We had a multi-decade partnership with the Big Ten. I, we, wanted to keep the Big Ten.

It just wasn't penciling for us. So, we had to make the tough decision to walk away. So, I hope that's helpful. The regional sports world is in disarray. How do you want to play in that reconstruction? We definitely do want to play. Let me be very clear about that. We want to be part of the solution to the leagues, especially the leagues that have had so much success from a local in-market perspective. And I have no hesitation in saying to you that we have made that abundantly clear to the League commissioners that ESPN, especially in a world where we have flagship, direct-to-consumer, we want to be helpful and part of the solution, and we would love the opportunity to leverage our technology, that where we can geotarget and locate where our sports fan is, leverage our incredible reach. For the last fiscal year, our fiscal ended end of

September, we averaged 112 million unique users a month across ESPN digital properties. That should be the top of the funnel for the leagues, and they should be looking at the ESPN reach and saying, Okay, this is the best opportunity that we have to get our content in front of as many fans as possible. And so, we will continue to convey that message to them, and hopefully, we can get to a part. What have they said to you? What have the League commissioners said to you? I think at this point, a lot of it is timing. I don't want to speak for any one individual, but a lot of it is timing as they work through things on their side. I think there are some large decisions that are happening on the regional sports network side as well that are complicating things, but I am optimistic that we will be able to work something out.

So, just so that I understand, hypothetically, what you're saying is that you could aggregate a bunch of these regional rights and then sell something where you might get access to all of them? Potentially. Okay. Potentially, yes. Yeah. Or we could break them out individually as well. So, here's my women's sports question for you, because obviously it's, this also comes up in every conversation. It's so hot right now. Are you thinking, is there a way that we can be more specific with our women's sports coverage on ESPN? In other words, are you thinking, we should infuse it more to our studio shows? Or we should just make a women's sports show and just have it dedicated to that? Are those thoughts. Yes and yes. Yes and yes. 100%. So, a couple of things. First off, we do take a ton of pride in how we have

amplified women's sports, not just over the past couple of years, but over the past four decades, we have made women's sports a priority. But today, when we're looking at how we can further advance women's sports, it's better time slots. It is networks with more reach, like broadcast, like cable, ESPN1. And as you said, Alex, it's studio, more integration into our studio programming. In terms of your follow-up, are we thinking about a dedicated women's sports show? Of course, we're always thinking about that. And there's several ideas on the content whiteboard right now. But I love the thinking, I love the energy. You know, across ESPN, I love our talent. If you look at the talent that we have, especially during the NCAA March Madness. Yeah, source of pride for so many at ESPN.

If you look at Elle, Chiney, Andraya, what they did day in, day out during that tournament, it was mind-blowingly great. And so you can expect to see more of that. Last question will be on the betting front, you guys struck a deal with Penn Gaming, you mentioned ESPN BET. I would say it's probably been a little slow out of the gate. I'm assuming you are okay with that because you think the real footprint will be launched when you guys launch flagship? Am I, is that fair? That is very fair. Ten-year deal. Okay, so obviously we are in the first inning just launched in New York. Significant product upgrades have been made and continue to make. By the way, our chief technology officer at the Walt Disney Company is now the CTO at Penn Entertainment, Aaron LaBerge. So, there's massive connective tissue between

our product, and tech people, and Aaron, and his team. You will see more focus on parlays, things like that. But yes, the integration into flagship will be critical. And then I mentioned before, the idea of sports fans being able to link their accounts. And then you will have a consistent bet module across ESPN digital pages, that will be a needle mover for us. But yes, this is definitely the first inning here with Penn and ESPN BET.

ESPN Chairman On Cord Cutting And Uncertain Future | Full Interview

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