Disney: The Renaissance and the Empire

Where this was said

ESPN: Disney's Accidental Goldmine

At 1:10:10 · chapter starts 1:05:55

The deal happened the way many of the best ones do: a chance encounter at the Allen & Company Sun Valley Conference in 1995, where Eisner ran into Warren Buffett (Berkshire's largest holding was ABC Cap Cities) and Tom Murphy, the CEO. Within days they had a $19 billion deal — at the time the second-largest acquisition in US history. The stated rationale was smart: the FCC had just repealed rules preventing networks from owning their programming, opening the door for vertical integration. Disney had ABC, a broadcast network, to distribute its content in the same way Walt Disney had originally partnered with ABC in the 1950s to promote Disneyland. But what nobody realized at the time — including Roy E. Disney, who later admitted nobody would have called ESPN 'the weightlifter of the group' — was that buried inside ABC was a cable asset unlike anything in existence. ^{[1] — Ben Gilbert "Nobody would have told you when that deal, the ABC deal, was being made that ESPN was going to turn out to be the weightlifter of the group…" 1:11:04 Play} ESPN had invented the affiliate fee model: charging cable operators per subscriber rather than taking carriage money from them. Starting under a dollar per subscriber, ESPN grew its leverage by acquiring long-term sports rights and threatening to pull them in carriage disputes — causing subscribers to riot at their cable operators' doors. By 2015, ESPN's affiliate fee was $9.42 per subscriber per month. Between 2008 and 2011, ESPN alone generated 60% of Disney's entire operating income, over $5 billion annually. ^{[2] — Ben Gilbert "ESPN = 60% of Disney operating income (2008–11): Between 2008 and 2011, Disney's cable networks segment — roughly three-quarters of which w…" 1:24:14 Play} It funded Pixar. It funded Marvel. It funded Lucasfilm. The cash from ESPN was the structural engine that allowed Disney to make every other good decision it made over the next 25 years.

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Nobody would have told you when that deal, the ABC deal, was being made that ESPN was going to turn out to be the weightlifter of the group. Nobody involved in it in any way ever would have thought that.

Ben Gilbert

Disney: The Renaissance and the Empire

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