Disney stock inched lower Monday following reports that the Dow Jones entertainment giant ended its 35-year partnership with the MLB and may potentially lose ESPN Bet.
Disney's ESPN sports network plans to exercise an opt-out clause to escape its Major League Baseball TV rights contract, the Wall Street Journal reported. ESPN had been paying $550 million per year to broadcast America's pastime, which Disney executives believed was far-too expensive.
ESPN Chairman Jimmy Pitaro met with MLB Commissioner Rob Manfred last year, claiming that baseball's TV rights are declining in value. Pitaro struck out on a proposal to cut the maximum price down to $200 million annually. Now, ESPN plans to exercise an opt-out clause to end its contract three seasons early, according to unnamed sources. ESPN's MLB deal was set to run through 2028. The sports network and MLB first inked a $400 million broadcast deal back in 1989.
The MLB is currently searching for a new broadcast partner for the 2026 to 2028 seasons. Manfred is also exploring new streaming packages and deals, which would allow fans to purchase the games for their preferred teams without blackouts. The change is intended to give the MLB more bargaining power over media rights, similar to the National Basketball Association, the WSJ reported.
ESPN Bet Future
Elsewhere, reports indicate that ESPN Bet could shut down in 2026. Sports betting company Penn Entertainment in 2022 signed a 10-year, $2 billion licensing agreement to use the ESPN name, in addition to having access to talent and TV advertisements.
CEO Jay Snowden during a Feb. 27 call with investors said he expects both Penn and ESPN Bet to be "in a really good place" getting into 2026. However, the sportsbook hasn't achieved the goals that executives hoped.
"But for whatever reason, we're not hitting the levels that we need to, then obviously as you're approaching that third anniversary, you have a three-year clause in the contract that both sides will have to do what's in their best interest," Snowden said, referencing the deal's opt-out clause after 2026.
Penn National holds just a 2.35% share of the sports betting market, according to the New York Post, well below its target for a 20% share by 2027.
Disney Stock Performance
Disney stock eased 0.9% Monday, reversing from a slight gain in early trade. Shares are working toward a 118.63 buy point for a cup-with-handle base.
Disney has rallied about 36% from its 2024 low in August.
Penn Entertainment retreated 3.5% Monday. PENN stock is trading in a handle buy zone, above a 21.18 buy point.
Shares have advanced almost 5% so far in 2025.
In the current market, IBD suggests stocks with ATRs of 3 or below.
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