Last week, Puck’s Dylan Byers reported that Disney’s at least exploring if it would be feasible to spin off cable sports giant ESPN. This comes in the wake of many pieces wondering what linear TV-tethered ESPN does as Disney pivots to streaming, and it’s not necessarily a new idea either. ESPN’s always engaged in a different business model than the rest of its parent company. TV’s shift to streaming has just made this more apparent now than it was before.

While nothing seems imminent here, the fact that the powers-that-be at Disney are floating the idea means it could realistically happen. We know Disney isn’t going anywhere. So the better question becomes: What would ESPN look like without Disney?

Carriage questions

While ESPN’s always among the most-watched networks on TV (per data from VIZIO’s Inscape), they’re also the most expensive to carry. Data from 2020 showed ESPN’s cost-per-subscriber nearing $7.50 per month, which comes in part due to the power of Disney at the negotiating table. ESPN’s viewership means it’s still going to command a high fee when talking to MVPDs. However, without being bundled with the other Disney networks, how does ESPN charge such a steep amount going forward?

Similarly, how does ESPN entice MVPDs to carry the whole family of ESPN networks alongside the main channel that far-and-away earns the most ad impressions and the best game inventory of all of the choices? Perhaps ESPN2 makes the cut, but ESPNU, ESPNEWS, SEC Network, ACC Network and the Longhorn Network? Suddenly, things could get a lot less certain.

Speaking of bundling, though…

What about the Disney bundle?

ESPN+ costs $7.99 per month, or you can pay $13.99 per month to also receive Hulu and Disney+ — both of which have much larger subscriber bases on their own, and a lot more premium inventory. Though ESPN+ subscriber numbers keep growing, would that continue if it wasn’t part of the Disney bundle? And how many of the reported 14.9 million of the current subscribers would stick around if uncoupled with the other Disney services?

Removing Disney from the equation forces one of two things for ESPN: Either immediately pivot ESPN+ to become a legitimate, streaming-focused version of your linear networks, OR treat it as overflow, as was initially the case, and hope you can eventually convince people to head there.

The first option’s tough, honestly. Not because it’s a poor idea, but because it’s the impetus for Disney wanting to break up to begin with. If Disney could easily pivot ESPN to ESPN+ streaming, it would. But because advertising dollars and linear live sports viewing are what makes the network worth it, going all-in on streaming pulls the rug out from under it.

This is not a unique issue for ESPN. It’s the problem for all networks that air live sporting events. However, on its own, ESPN would be the only (national) one that isn’t either tied directly or indirectly to the broadcast networks, or airs a bunch of non-sports content as well. That’s why it’s a worthwhile gamble for ViacomCBS to be all-in on Paramount+ or NBCU to be all-in on Peacock. They’re potentially harming ad dollars in the short-term, sure. But not for every piece of programming; which for them is far less perishable than live sporting events.

ESPN can strike a balance in between the two options above, of course. But it’s yet to show dedication to doing so.

Where’s the money coming from now?

ESPN makes plenty of money on its own. But part of how it grew to be the “Worldwide Leader in Sports” is having the financial backing and stability of Disney. So it could take risks, invest in the future, put a lot into talent, or — as is regularly the case — dump a ton of cash into rights deals without any true fear of repercussion. The live sporting events would make the money back. And if not, Disney’s likely to pick up the tab.

The lack of a “wealthy benefactor” means ESPN can’t necessarily outspend its competitors to the same extent (since said competitors still have broadcast dollars backing them) and could come to regret the number of large, long-term deals currently in place. In particular, it’s potential bad news for the SEC renegotiating its $3 billion deal now with Texas and Oklahoma in the fold. With the NBA also looking at a big raise with its own new rights deal, will ESPN have the ability to pay up?

Because part of the value of contracting with ESPN on TV rights comes from the distribution that comes with it. That includes carriage (see above) as well as the fact that ESPN productions appear on ABC. Without that, you’re looking at a lot more playoff and championship-round content on cable — meaning fewer viewers and likely fewer ad dollars in kind. This isn’t to say that ESPN can’t afford to pay the NBA or another entity what they want from TV rights. But it gets a lot harder when one of the main avenues to eyeballs is no longer in play.

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This could all be concern about nothing, of course. And ESPN might be staying within Disney’s walls for years to come. But if any spin-off starts getting some traction, these are the bigger questions that need to be answered for the business side of ESPN. Can it survive on its own and be what it is now? That answer may come about soon enough.