Disney Deathwatch: The Sportsball Edition

Michael Eisner’s most long-lasting impact on Disney was not his editions to parks nor his revival of Disney animation.  Rides wear out and Disney appears to be institutionally incapable of making anything approaching the kind of animated masterpieces they used to.  

No, Eisner’s biggest long-term impact was the acquisition of ABC. That came with a major asset and a major liability disguised as an asset. Namely ESPN and Bob Iger.

Indeed and truly if it wasn’t for ESPN, Disney would be trading at twenty dollars a share assuming it still existed at all. It is those contracts that float the entire company. Devil Mouse survived the lockdown in large part because of ESPN. Those contracts are  jewels in the crown.  

And Iger is about to pry one of those jewels out.

Disney just took a very major hit that it wasn’t expecting.  What football is to America, futball is to the rest of the world.  India especially, which is where Disney just took one in the grape. You see, both football and futball have become major headaches for Cancer Rat, here’s why.

Star is the company that Disney created to screw Universal out of the money it would have been due with an international version of Hulu. Disney is currently unloading Star on Reliance Industries because it’s a money loser for Disney (lots of reasons for that).  Yeah, there are millions of subscribers but they are in India where the cost of living pretty much restricts you to subs that run about forty cents a head. It is not profitable enough for Disney to keep but is profitable enough for Disney to sell.

However, the most profitable part of Star, Disney opted to sell off separately and that is the India Super League soccer contracts. Disney sold those to Zee Entertainment for a princely $1.4 billion, to be paid in installments of $200 million. Sony for its part liked that idea so much it has decided to merge with Zee.

All good.

Now for the bad.  Disney’s cash on hand has dropped to around $10 billion according to their last earnings call.  That is about three weeks’ worth of operating expenses at Disney. And Disney is also paying a fuck ton of money for the rest of Universal’s stake in Hulu, several billion of which will be in cash.  Consequently, the sale of the soccer contracts to Zee Entertainment was a badly needed infusion of cash when it was mostly desperately needed.

Yeah, about that…

Zee has defaulted on its first payment. 

A quick look at Zee’s cash on hand reveals it doesn’t have a prayer of being able to cough up anything, anywhere near its first payment let alone the entire $1.4 billion.  Now Disney could in theory get the rest of its money from Sony.  Assuming that Kenchiro Yoshida was God’s perfect retard.  

Which he isn’t.  Sony will just sit back and wait for Zee to auger in, then pick up the pieces for Rupees on the Dollar. In short, Disney is screwed when it least needed to be screwed.

This appears to have led Iger to into making what, on the face of it, is a really bad deal for Disney.  He is selling a chunk of ESPN to the NFL.  And this is a straight-up sale of a portion of what has kept the lights on at Disney through the worst times in that century-old company’s history. 

It is reasonable to assume that Mickey the Great and Terrible has no choice in this.  Those sports contracts that float the company cost a great deal of money to renew and it’s money that allegedly the House that Walt Built does not have. 

I’m sure Bob will trowel gallons of lipstick on this pig and use lots of words like “transformative, ” “synergistic,” and “bold new era in sports streaming entertainment.”  But at the end of the day, this is going to be a permanent decrease in Disney’s lifeblood. It is unquestionably a short-term gain at the price of long-term loss.

I suspect but can’t prove that Bob thinks he’s sharp enough to get the best of his new partners just like he has in the past with Geroge Lucas and Ike Perlmutter.  

Yeah, no. 

Not this group.  The NFL is a club for billionaires, collectively and some individually are drastically bigger than Disney.  This will be a relationship between a mammoth and a mouse. This isn’t a camel’s nose you want under the tent.  When there is this big of a power imbalance in a business relationship, the junior partner always seems to lose that which he holds most dear. This deal may well result in Disney eventually losing all of ESPN.

When you sell one jewel in the crown, the rest always seem to follow.

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