NFL and WWE Land on ESPN—The Impact on Disney and TKO Stocks
Do you smell what the Mouse is cooking? ESPN, one of the largest subsidiaries of The Walt Disney Company (NYSE: DIS), announced major agreements last week with two of the world’s most prominent sports leagues: the National Football League (NFL) and World Wrestling Entertainment (WWE).
The deals mark a significant push by ESPN to bolster its live sports portfolio ahead of a critical streaming launch, underscoring the growing battle for premium sports rights in an increasingly crowded media landscape.
The agreements bring high-value programming to ESPN’s new direct-to-consumer (DTC) streaming service, which is scheduled to launch before the start of the NFL and college football seasons.
ESPN reached deep into its pockets to secure these deals, including surrendering a 10% equity stake to the NFL itself.
For Disney, these moves come at a pivotal time as the company seeks to stabilize subscriber growth and solidify its position against rivals like Amazon Prime and Peacock, both of which have been aggressively chasing live sports content.
But how beneficial are these new arrangements to parent companies Disney and TKO Group Holdings Inc. (NYSE: TKO)?
Today, we’ll explore why these companies came together, their strategy moving forward, and how their stocks responded in the days following the announcements.
Disney Adds Valuable Media Properties to Growing Streaming Platform
For Disney, adding NFL and WWE programming to its new DTC streaming app was crucial for attracting customers who might be feeling tapped out over yet another monthly subscription. Launching August 21, the new ESPN streaming app will feature programming pillars like NFL Network, NFL Red Zone Channel, and WWE ‘Premium Live Events’ such as WrestleMania, the Royal Rumble, and SummerSlam.
With an expected price of $29.99 per month (or $299.99 annually), this new ESPN DTC app needs to provide compelling value to consumers, and sporting events like NFL games and WWE specials remain one of the few areas of live TV where customers are willing to pay a premium. ESPN is planning to offer more than 47,000 live sporting events through this new streamer, with a cheaper option priced at $11.99 per month, featuring more targeted events like FCS-level college football, soccer, and tennis.
The NFL and WWE boast two of the most passionate and dedicated fan bases on Earth, and adding these massive demographics will complement Disney’s network of streaming options like Disney+ and Hulu. The company plans to offer a variety of packages and bundles for its multi-pronged streaming attack, and the launch date isn’t a coincidence either—the FOX ONE sports app is also being released on August 21.
NFL and WWE Add Revenue Streams and Collaborative Partnerships
The rights to these events didn’t come cheap, and both the NFL and WWE will have lucrative new revenue streams for signing over some control to ESPN. For the NFL, the agreement with ESPN comes with a 10% equity stake, which will allow the league to make sure the programming aligns with its mission and goals.
It also means the NFL has a financial interest in the success of ESPN’s new streaming service, which means promotion across the NFL’s various media channels, live events, and outreach programs. An equity stake is a unique agreement between a league and a national programmer, and could finally mark a shift away from the traditional licensing models that have shown diminishing ROI.
WWE (and its parent, TKO Holdings) receives $1.6 billion over five years in their deal, which includes ESPN paying $325 million per year for exclusive rights to stream marquee live events like WrestleMania. Formerly available on Pay-Per-View, WWE’s premium events currently air on NBC streamer Peacock, which has a lower price point but also less reach than the ESPN conglomerate.
WWE and NBC agreed to a five-year deal worth just over $1 billion in 2021, but this time, NBC failed to match the $325 million ESPN was offering annually for the exclusive premium event rights. WWE not only gets lucrative revenue streams, but new partnership opportunities with ESPN’s cast of personalities, many of whom (such as College Gameday’s Pat McAfee) are already involved in pro wrestling. WWE’s weekly flagship program, Monday Night Raw, will continue to air on Netflix Inc. (NASDAQ: NFLX) through 2034.
How The Deals Have Affected DIS and TKO Stocks
TKO shares have surged more than 15% in the week since the announcement, although some of that gain was due to the company’s new $7.7 billion UFC agreement with Paramount. The company’s Q2 earnings report, released after the August 6 close, also boosted confidence as revenue grew 53.7% year-over-year (YOY) to $1.31 billion, above the expected $1.23 billion.
Thanks in part to these new licensing deals, the company boosted its full-year 2025 revenue guidance to $4.63 billion to $4.69 billion, the second straight quarter its raised guidance. Shares are also now trading above the 50-day and 200-day moving averages, so technical and fundamental factors are beginning to align in TKO.
For DIS shareholders, the latest foray into the streaming space is an expensive endeavor, and the company is counting on rabid fan bases paying higher rates for their favorite live programming. A $29.99 price point isn’t aimed at mass adoption; it's for dedicated sports fans. While offering the NFL Red Zone Channel, NFL Network, and WWE’s biggest shows is an impressive lineup, pushback from fans about the elevated price could dent the potential revenue boosts.
Additionally, Disney risks cannibalizing some of its own growth if customers cancel Disney+ or Hulu to pay for the new app. So far, investors see more of a value proposition in TKO shares; DIS is down more than 2% over the last week and will likely need to demonstrate substantial subscriber numbers for its new DTC service to catch TKO’s gains.
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