While many media companies are struggling to adapt to a changing environment and emerge from the economic recession, Disney seems to be doing well. Not shockingly, the money-making machine driving the corporation’s success is ESPN.
Forbes lists Disney’s estimated stock value at $45.20, roughly 5 percent above the market value. According to the financial publication, ESPN is Disney’s most valuable product segment, accounting for an estimated 28 percent of the company’s stock value.
As the most valuable segment, ESPN’s success has a greater relative effect on Disney than any other part of the company. A main reason for the network’s growing strength: its ad revenue grew 34 percent year-over-year in the first quarter of fiscal year 2011. Unsurprisingly, Disney credited demand for NFL programming and corresponding ratings growth as a major contributing factor in the increase.
With football’s increasing popularity, Disney’s cash cow—and the world’s largest sports entity—continues to grow fatter. But that also means as the labor dispute continues, the stakes of the possible NFL lockout are increasingly higher for ESPN and its parent company. No football equals big bags of missing ad revenue, and if ESPN’s profitability slows down, it could have significant consequences for the balance sheets of the corporation as a whole.
Of course, other deals are in the works that will continue to promote ESPN’s growth outside of the NFL. Its impending deal with the University of Texas is worth a reported $300 million, and despite questions about the competitive advantage it may afford Texas, the deal will likely only help the network – and, by extension, its parent company – continue to grow.