ESPN used to be Disney’s cash cow. Now, its revenue is declining and Bob Iger is looking to sell a stake

The sports network, once a financial engine for Disney, is suffering a decline in revenue due to the slow death of traditional cable TV. Though ESPN is still profitable, Disney is looking to sell off a stake and transform the business into a digital streaming company, though near-term plans for that are unclear. 

Disney CEO Bob Iger told CNBC in July that he wants “strategic partners that could either help us with distribution or content.” 

ESPN has long been the reliable moneymaker of the media and entertainment giant. In the first half of 2023, Disney’s cable networks division, led by ESPN and its sister channels, generated $14 billion in revenue and $3 billion in profit. But revenue for those six months is down 6% from what it was a year earlier, and profit dropped 29%, according to the New York Times. Disney does not break out ESPN’s finances separately. 

Since Disney acquired it in 1996, ESPN’s revenue—which largely comes from cable fees and advertisements—has played a major role in Disney’s growth, helping pay for the acquisitions of Marvel, LucasFilm, Pixar, and 21st Century Fox, along with building its streaming service, Disney+.

Iger recently enlisted the help of former high-ranking Disney execs Tom Staggs and Kevin Mayer. Both Staggs and Mayer were considered candidates for the chief executive position in 2020, until Bob Chapek was hired and then quickly fired, with Iger returning as a “boomerang CEO” in November 2022.

Mayer and Staggs’ return was originally reported by Puck, saying they will consult with Iger and ESPN president Jimmy Pitaro on the future of the sports network, and, to a lesser degree, Disney’s other TV networks like ABC.

Pitaro said the company had seen “a healthy level of interest” from sports leagues as well as technology, marketing, and distribution companies for buying a stake in the business. 

Disney did not immediately respond to Fortune’s request for comment.

Death of a (cable) salesman

Cable subscribers are an endangered species. 

Since streaming platforms started their rise in the mid-2000s, cable television has been on the decline. In the first quarter of 2023, cable and live TV providers lost 2.31 million subscribers, Cord Cutters News reported.

Streaming platforms offer cheaper subscription options and let viewers watch what they want, when they want from their massive libraries of shows and movies. The average cable bill is over $200 a month, according to U.S. News. In comparison, the standard Netflix subscription plan is $15.49 a month.

ESPN’s two main revenue streams rely on cable: affiliate fees from cable providers and ads. Affiliate fees are monthly fees paid by cable providers for the right to offer ESPN channels to households. ESPN collected around $626 million from affiliate fees in 2022, according to the New York Times, citing S&P Global Market Intelligence.

In terms of advertising, ESPN has earned over $2 billion annually from it in recent years, the New York Times reported.

Iger told CNBC that ESPN will transition to a streaming service, but declined to share the timeframe. However, in later reporting, sources told CNBC that a new direct-to-consumer product won’t be ready to launch before 2025.