ESPN helped Mickey Mouse a lot in 2024.
During summer, the sports channel helped Disney's streaming business start turning profitable a quarter earlier than expected.
In fiscal Q3, Disney+, Hulu, and ESPN+ earned $47 million together, but without ESPN, the streaming business would have lost $19 million.
The Walt Disney Company acquired a controlling stake in ESPN in 1995. In fiscal year 2024, which ended Sept. 28, ESPN generated $17.6 billion in revenue, accounting for nearly 20% of Disney’s overall revenue.
Live sports are gaining momentum, and Disney certainly has more plans.
So does Disney’s (DIS) biggest newest sports streaming rival, Netflix (NFLX) .
Netflix’s next big move: Sports
Netflix doesn't just produce movies and TV shows anymore. It has pivoted from "not interested in live sports" to inking massive sports media deals.
In January 2024, Netflix announced a massive 10-year, $5 billion deal with WWE to begin airing the wrestling promotion's flagship Raw brand on Netflix in 2025, marking its first long-term commitment to airing live sports programs.
In May, the company announced a three-year deal with the NFL to broadcast a pair of the league's Christmas Day games, marking the company's first mainstream American team sporting event.
Bloomberg reported that Netflix agreed to pay the NFL $150 million for those two games. However, that hefty sum could still be a good deal for Netflix. It has been calculated that Netflix could make $100 million per game on ads alone.
Related: Netflix's Jake Paul vs Mike Tyson fight tests live sports strategy
According to data provided by Netflix, the Chiefs’ 29-10 victory over the Steelers on Wednesday was the second-most-streamed live sports event on Netflix after November’s Tyson-Paul fight, Front Office Sports reported.
Netflix’s performance tops rivals this year
Netflix has had a robust year. Its earnings and revenue for the three quarters all surpassed Wall Street’s forecast.
In the latest reported third quarter, Netflix earned $5.40 a share, topping analysts’ forecast of $5.12. Revenue was up 15% to $9.83 billion, beating the company’s guidance and consensus estimates.
Netflix expects revenue to grow 15% for both Q4 and full-year 2024.
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For 2025, Netflix expects revenue of $43 billion to $44 billion, representing 11% to 13% growth from its 2024 guidance of $38.9 billion. Increased paid memberships and average revenue per membership primarily drove its success.
In October, Netflix reported an increase of 5 million subscribers during Q3, topping Wall Street’s estimate of 4.5 million, according to StreetAccount data pulled by CNBC.
Netflix had 282.7 million memberships in total as of Q3.
Netflix stock is up 90% year-to-date. Its rival Disney is up only 25% and Warner Bros. Discovery (WBD) lost 7% over the same period.
KeyBanc analysts raise Netflix stock price targets
KeyBanc analysts led by Justin Patterson have raised Netflix’s stock price target to $1,000 from $785, maintaining an overweight rating.
The firm cited several reasons to believe Netflix can outperform the S&P 500 into 2025, including moderating competitive intensity, growing live streaming events, better-than-peers revenue and EPS growth, and more valuation floor.
KeyBanc also sees potential for Netflix to raise prices, with strong content like NFL and Squid Games 2 generating monetization opportunities. The possibility of partnering with UFC (Ultimate Fighting Championship) also adds to its attractiveness.
Related: Analyst resets Netflix stock price target ahead of 'Squid Game 2'
Despite UFC's previously stated preference to remain on ESPN, KeyBanc analysts believe Netflix’s success with the Tyson vs. Paul fight and the initial viewership hours of WWE (one of UFC owner TKO’s business units) could make Netflix a strong contender.
Meanwhile, there's still room for future price hikes. "Based on U.S. price points, Netflix is still roughly half the cost per hour of cable TV and materially lower than movie tickets," the firm wrote.
“With more live events coming, we believe the probability of price increases is increasing,” KeyBanc added.
Netflix's last major price hike was in January 2022.
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“The market is in a ‘Netflix won’ narrative,” the firm wrote. However, analysts also warned that Netflix’s high valuation could represent risks for investors.
Netflix's NTM EV/S (Next Twelve Months Enterprise Value-to-Sales) multiple is now at 9x, "a level that has historically represented a ceiling," the firm said.
Netflix closed at $924.14 on Dec. 26.
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