The Future of ESPN

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1:41Congratulations, you made the varsity podcast. My name is John Aranda and I'm Puck's sports correspondent and the host of this pod. And today, the great media reporter Peter Kafka joins the varsity. Now, I've been a fan of Peter's work for a long time. He's someone who really understands the media business. He's seen where it's been. He's reported on where it is. And he has a good sense of where this is all headed. Peter's the chief correspondent for Business Insider and the host of the channel's podcast, which posts every Wednesday. And I'm very happy to have him on here today. Before you get to Peter, today is Sunday, May 10th.

2:18And here's what I'm watching. I want to start with the demise of Main Street Sports. That's the group that operates all of the FanDuel sports networks across the country. The channels were started way back in 1996 as Fox Sports Channels. And in what may be the best sports media deal of all time, Fox decided to get out of the RSN business 20 years later and sold them to Disney. Their value at that time, more than$20 billion. Well, federal regulators made Disney sell them. So Sinclair picked them up for about$10 billion. And a couple of years later, they were in bankruptcy. and now this. Main Street used to have 750 employees.

2:59There's only about 75 now to manage the channels until they all go dark this summer. The end for most fans came a little more than a week ago, and that was when the Minnesota Wild beat the Dallas Stars in the first round of the NHL playoffs. Main Street carried the deciding Game 5. It turned out to be its last game. One more note before we get to Peter. Roger Goodell is, I'm sure, breathing a huge sigh of relief right now that the NFL Referees Association okayed a new collective bargaining agreement. Nobody, and I mean nobody, was excited about the prospect of replacement referees. Do you remember the last time the NFL had replacement refs in 2012?

3:39That was with the Fail Mary, otherwise known as the Inaccurate Reception. That was when Golden Tate caught a game-winning touchdown for Seattle. And one official called the catch a catch. Another one called it an interception. It was ultimately ruled a catch, but the refs did miss offensive pass interference on the play. Good times. Okay, now, let's get to Peter Kafka. Peter Kafka, I just spent the intro singing your praises and telling how much I've been following your writing for decades now. And you are somebody who has been, you know, writing about where the media industry was, like where it is currently.

4:21And you have a good handle on sort of where things are going. So I just want to start with a really open-ended question for you. And just the state of media right now in 2026, in the spring of 2026, what are some of the big themes or storylines that you're really focused on right now? So the main theme that comes up in most conversations I have with media executives, people in the media business, people looking for what's interesting, all comes down to the same thing. Shorthand is creator economy, but I hate that term. So let's just pull it out a little bit. It is big media companies. Well, here, it's it's it's we'll flip it around.

5:05It's individuals or small groups of people making their own media, whether that's a podcast or a story or video or some combination of that above. Selling it or bringing it directly to audiences, usually through a platform like Substack or TikTok or YouTube, et cetera. and getting a lot of notoriety and fame and money and heat. And it's unclear not how much actual audience they're getting. That's a debate we can table for the second. But what it means is every media executive I talk to says, boy, I really wish I could work with, in the name, a hot sub-stacker or YouTuber. Emily Sundberg, I don't know if your audience knows who Emily Sundberg is, but in New York, they're all bananas over this woman who writes a sub stack about sort of fashion and, and hot clubs, et cetera, or in your world, Pablo Torre.

6:03How do we, how do we get those people to work with us? And how do we, if we have those kinds of people who are already working for us, how do we get them to stay working for us instead of leaving and going off on their own? And there's a real mismatch in terms of sort of what those name brand people want and what the big time publishers and media companies can offer them. And in some cases, you see these deals sort of really tilting in a weird way, right? Like I'm sure you guys have covered ad nauseum, Pat McAfee's ESPN deal, right? where that is a classic example of ESPN saying, this guy has so much audience, so much clout, so much heat, we'll basically hand over a big portion of our network to him specifically.

6:48And we don't even employ him. We're just doing a straight licensing deal. And so I think that kind of sums up a good chunk of the media discussion that I'm in right now. Yeah, let's start with, you mentioned Pablo Torre, a former guest on this podcast who just won a Pulitzer with the story. And it's funny because, you know, he does have an association with the athletic, I guess. But there are a lot of media companies that really want to get with Pablo. But if you're Pablo, do you really want to go to those media companies? Because he has so much freedom to, like the story that he won a Pulitzer on, I'm not so certain that would have gotten through.

7:32And he said this on the pod himself. with the New York Times, if he was like posting it on the New York Times. And so like for the creators, sometimes it doesn't make sense to go that route. Well, I mean, we're in this weird planet now where people like a Pablo Torre or an Emily Sundberg or a name that people can incredibly talk to the New York Times or ESPN and say, it's very flattering that you want to work with me, but really what can you do for me? and you know and and they can always pile up cash for them but you know they can get cash lots of places and these guys make a lot of money so assuming the money is kind of the same or i can make better money on my own what can you the new york times do for me and they're hard you know in some cases the new york times is of the world are hard pressed to make an argument um and again we We can just, in my world, we can go through lists of people who are leaving high profile publications to go off on their own in a way that really you wouldn't have considered possible five years ago.

8:38Or what would happen is those were people who were going off on their own five years ago, people who are sort of forced out of media. They got laid off or they got frustrated. And here they're just saying, oh, I can do much better on my own, in theory, than working with an ESPN or the New York Times, The Atlantic. It's amazing. Yeah. And then the other side of the coin, you have somebody like Dave Portnoy, who has built up Barstool. And Barstool is, by any accounts, a massive success. It hits an audience that TV networks aren't able to hit. And the viewer figures or click rates are through the roof.

9:17when he goes on television, Barstool on Fox Sports 1, FS1, doesn't really get any ratings. Are there just different audiences that are watching television versus what? So if I were to advise somebody to Barstool, like Big Cat, that the whole allure of like, oh, we're just going to get a television show and then everything's going to be said, you don't need that anymore. I mean, that is a longstanding trend, you know, going back to the MySpace era where these digital people would pop up. And for a long time, the thinking was, oh, they obviously want to go from MySpace or YouTube to television. And we saw various networks try to bring digital talent to traditional television.

10:02And for the most part, it did not work at all, which makes sense, right? If you're someone who's watching Dave Portnoy on YouTube or TikTok, you may not watch any television. You may not have a cable TV subscription. I don't know how you would see him on Fox to begin with. We have a couple of counters recently where Mr. Beast's audience seems to have traveled with him from YouTube to Amazon. That's really one of the first times there was a there's another YouTuber whose name I'm now spacing on. maybe someone bright will remind me of it but he had the number one movie the week Melania Trump's movie came out had you know basically zero press attention but he got his followers to come out and watch the movies Markiplier that's his name that movie is called Iron Long so there are some examples of digital people who are able to bring their audience thank you but generally I think these are different audiences on different platforms and I think if you are a big media company if you're diluting yourself and saying oh if we bring x y or z to our platform we'll bring their audience you are mistake you're mistaken I think it might be reasonable to say well obviously we're not going to get people to the New York we're not going to get again a Dave Portnoy to come to Fox but maybe it's good to be in business with with Dave Portnoy anyway because his digital reach is what we really care about and that's our future.

11:33We'll make that work. And so if Dave Portnoy turns out to be a dud on linear TV, maybe that's not the worst thing in the world. But, you know, McAfee, who you brought up already, seems to work for ESPN and it seems to work for McAfee too, I think. Why is that? I don't know. I don't know. It could be just as basic as he has an authenticity or persona that resonates with those words. The authentic word, ding, ding. I mean, Portnoy is authentic too. I don't know. It could be just that Portnoy's shtick only works in a certain kind of container. I met McAfee a million years ago on a panel at South by Southwest, and he was the sub for Deion Sanders.

12:17And I was bummed out that I was getting this punter from Indianapolis instead of Deion Sanders. And after the end of the panel, I was like, wow, this guy's really good. He's really authentically entertaining. I think maybe he's got a future in media. That's my big insight. And it turned out like he's, you know, he was a unicorn. He was really fantastic. Dave Portnoy is good at his own thing, but they're just, I'm just vamping here to say, I don't know. I don't know why McAfee resonates better than Portnoy does. yeah and nobody nobody does i mean he i guess i've always viewed it almost more as almost a marketing play for espn you know because they do allow an hour on uh off of espn that's going to be on youtube and it's just branding espn for uh kids in their 20s almost and you know and and uh in a way that like you said maybe they're not watching tv certainly they're not they're not subscribing to a multi-channel bundle like, you know, Comcast or YouTube TV.

13:15They are probably not even subscribing to ESPN.com, the standalone product, because I don't think many people are. You had, speaking of ESPN, you broke what I thought was a really significant story recently by saying that there is no story, essentially, but still a good one, because there had been rumors that I've perpetuated that Disney was looking into spinning off ESPN. And everybody that I talked to said that, you know, there's going to be a decision made. People didn't know whether it was going to happen or not going to happen, but the decision was going to come kind of by the end of the year.

13:52Well, you had at the end of April, the Disney sort of deciding like, yeah, that's that's not on the card. So, yeah, where do things stand? Is it is it completely off? Is it tabled? Is it something that they'll pick up in like a year? what what's your sense of where here's the way it's described to me it's not on the table there's not a discussion about bringing it to the table all of that said in a year could they someone put it on the table sure um so we always add those modifiers but it is it is not part of their plan in the argument i didn't really get into this in the story but i think that their Our thought is whatever benefit we would get from spinning this out and the real benefit right is Wall Street gives you a bump and says, okay, you've taken this thing that we consider to be a drag on your stock and you've pushed it up.

14:47We think there's more for us to gain by having ESPN be part of this digital bundle. I mean, the cable bundle, sure, but we know the cable bundle is shrinking, but we think our future is some combination of Disney plus Hulu, ESPN combo. and we would rather have it in the family than not. Again, you could talk about, you could still do that and not have them own it outright. They could spin it out and still own 49%. Their ownership structures make it difficult to do that. They already have partners with Hearst. Now they have partnered with the NFL. That makes it more difficult. It all could be done.

15:23They could still go ahead and spin it off if they need to, never say never. But yeah, that's the long and short of it. And here, I'll run down my own scoop because I heard from some of my colleagues saying, well, this was never really something they were talking about. It was always clear that Josh DeMauro, the new CEO, wasn't going to do it. And that's all true. Fair enough. But the fact that I was able to report out that, no, they are definitely – it's definitely not being discussed still qualifies as news, I think. Yeah. Don't let anybody throw shade on you, by the way, because that was some of the – I just want to provide proper contact.

16:03I'm a longtime expert at throwing shade on other people's streets. Well, I will say that was some of the spin coming out of ESPN. Of course, after I saw your story, immediately made calls, and some of the spin coming out of ESPN was like, oh, well, it was never really seriously considered. It was seriously considered. It was seriously considered. And also, even if they weren't considering it, and I don't know why they don't come out and say this publicly. Well, I can think of some reasons, but they have not said it publicly. I think it is something that probably would be useful for them to say publicly at some point as a specific message to people on the street and other folks who are asking them about this, but I'll let them handle their own IR and comms work on their own.

16:48All right. In a former life, I used to be a reporter for cable trade magazines. I used to the ground floor to watch espn as it became just this goliath you know 100 million homes most expensive uh cable channel uh that their channel that there is not just cable uh and it just for for you know decades it ran disney and so the idea of of uh spinning it off because cord cutting is happening and it is starting to be a drag on disney to me it's like i like i can't get my head around that because this is the old espn for goodness sakes uh beyond the fact that it's losing subscribers it's creating uh you know uh linear tv which you know is dollars for digital which is you know dimes what are so what are some of the advantages that disney would have if it were to spin this off why why would disney decide to spin it off you you spin off something you spin off when you're spinning something off, you're trying to say no matter what, hey, here's the good company and here's the less good company.

18:02And sometimes it's the company you're spinning off is the good company. And sometimes it's the one you're keeping is the good, right? This is the Versant Comcast split, right? And Comcast will tell you they want Versant to succeed and they're setting it up for success. But if they really thought Versant, which is this collection of cable channels, had a future and was in great shape, they would keep it. They're splitting that off because they think it's a drag on the stock. And sometimes the flip side is we saw this a bunch in some of the digital booms where you'd say, oh, we have a hot digital property and we're going to spin that out.

18:38And that will get some crazy multiple and we'll get value for that. You're really just talking about financial engineering generally. It's kind of that straightforward. If Disney were to spin ESPN off, and it is something that, again, was considered. So that's why I'm sort of focused on it. What does that say about Disney? Because we know Josh DiMauro comes from the parks, and where ESPN was on Disney stock a decade ago, that's where parks are right now. The idea that that was a potential option that is now off the table, but it was a potential option, what does that say to you about Disney? I mean, it really just says, I think it almost says more about ESPN.

19:23and just the fact that like you were talking about that this was just in it was there was no competition in theory they were competing with fox for sports rights but they really weren't for years and years and years and they acted like it and they just had this crazy flywheel and they don't and that tells you about how value of sports is changing but really just the the the idea of being able to own a piece of real estate in the media firmament that was just untouchable that no one could no one could hope to scale i'm mixing all my metaphors here so it's really just a nice metaphor for the the the world of big media and again sports is the last sort of linchpin holding the traditional tv bundle together espn is the biggest part of that and for them to even have discussions about well maybe life is easier if we spin this out just tells you i mean you asked me what's the state of the media business that's another answer to what's the state of the media business.

20:18This could even be a discussion. Tells you how far things have changed from, again, go back to 2015, Bob Iger tells Wall Street, well, actually, we saw some ESPN subscriber growths. Actually, we lost subscribers in our last quarter. Freaks everyone out because even people who believe that cord cutting might be a thing that will never touch sports. Everyone has to have sports. We now know that is not true. And this is another, another sign. That Bob Iger quote from 2015 to CNBC is one of my favorite, the favorite things that I've ever covered. Cause he almost said it as a throwaway line. And then within, within, what was it like a couple of weeks?

20:59Like, no, I meant to say, and I meant to say, to say, you know, the house is on fire. All the other, all the other media stocks were crashing. And then there was a good year of like should they get rid of ESPN then? That was the whole discussion. And when will you take ESPN digital? That was the other thing was when will ESPN be available over the top as a standalone product? That was a 10-year discussion that again was a super hot discussion in 2015, 2016, cut to last year. ESPN launches a standalone project. People like you and me cover it and go, this is an interesting milestone. It's not important, right?

21:36It is not a big deal. It's not a big deal in the broader world of media and you'll note disney is not playing it up as a big deal on their earnings calls either no and in fact yeah the there was again i'm betraying my roots covering the cable industry way way back when but there was a big fear okay espn's gonna go like over the top it's gonna launch its own so you don't have to subscribe to cable that's gonna kill cable subscribers well we've seen recently that you know the charter did a deal where all of its subscribers get access to the espn app youtube tv uh has uh the espn programming ingested into its uh yeah it's a service and what what you've seen and i don't know if this is a blip or a trend and this is sort of what we cover but the the cord cutting has sort of it's mitigated a little bit you've seen a couple of uh of um uh distributors see an increase in subscribers which i find to be fascinating in 2026.

22:37So that is an interesting data point. And then the next question is like, is that are those blips or in sort of a continued downward trend? Or have we sort of reached the bottom? That was always an argument you'd hear 10 years ago, well, we know, we know the cable universe is going to shrink. And the question is, how much is it going to shrink? It's not going to go to zero, is it going to go to 80 million, 70 million, 60 million, I think we're below 50 million now. But at some point, the thought was everyone who needs to pay for TV in one form or another is going to pay for it. And that will be the universe we have going forward.

23:10And what we don't know is whether we've hit the floor or not. Yeah. Every time I have Michael Nathanson of Moffitt Nathanson on the pod, that's still a question I have. Okay. It was at 60. It was at 50. Where is it now? We don't know yet. And nobody knows, which is why it's a good discussion. um you mentioned sports as being the linchpin keeping the bundled uh the the cable bundle together which of course it is uh all live programming i think but especially sports we're right now in the middle of negotiations for nfl programming which is uh it it feels almost like custer's last stand for for the broadcast networks i mean if they lose the nfl to the streamers um what what happens to their businesses and it's uh for me this is a fascinating uh area to cover and i'm you know solely focused on this um what's your take like as somebody that covers more broadly media than sports media what how are you viewing the whole nfl renegotiating with the broadcasters do you think it's as as uh pivotal as i do well yes it's short answer one but i have a question are there negotiations happening because i keep hearing that they're gonna happen and then i keep hearing they're not happening i should have done air quotes with the negotiations uh the the the negotiations so far are really not happening although all sides are saying which means they're part of the negotiation that the the fact that negotiations are not happening is part of the negotiations yes that is a great point yes the media guy the media guys are saying hey nfl we know that you think that you've got us over the barrel and that we'll pay anything for nfl rights and they're you're kind of half right on the other hand we're not gonna we're we're gonna play this out as long as we can and we think we have some leverage and we can discuss this as well that uh this wall street journal article had popped up late last night thursday night uh has rupert murdoch um getting trying to get trump trying to get help from donald trump and the white house and the federal administration uh to push back against the nfl essentially in these negotiations um the point is if you've got rupert murdoch asking for donald trump for help negotiating with the nfl that's a pretty good sign that these are meaningful negotiations or a meaningful inflection point, I guess.

25:43More practically, look, these deals only come up every seven, 10 years. So however this turns out, it's going to set the table for the next five to seven years of media full stop. Now, they might end up just kind of where we are, where all the networks who have NFL need to keep them, especially CBS and Fox. They will keep them. They'll pay more than they'd like, but less than what the NFL would like. And we kind of keep the status quo. If I had to bet, I think we kind of stay there. I don't think the NFL wants to move all of the AFC games to YouTube or pick your digital player. And I think politically that would be very difficult.

26:25So I think the NFL will keep doing what it's doing, which is finding ways to extract a dollar here and a dollar there through media rights, finding ways to create new inventory like they're doing right now. They're going to sell these extra games to Netflix. Those were games that were on the NFL network. Try to find if they can extract some money out of international expansion. And those are their moves. The question for them is at the size they're at right now is for them to like make a meaningful change in their growth rate, they have to do really significant stuff. And I don't know if the stuff they're talking about is significant enough, but that's a Roger Goodell problem, not a normal person problem.

27:30investing, home buying, and choosing credit cards with clear research-backed insights. No jargon, no misinformation. Make your next financial move with confidence. Follow NerdWallet's Smart Money Podcast on your favorite podcast app. Hi, my name is Lloyd Lockridge, and I'm the host of a new podcast from Odyssey called Family Lore. In this podcast, I'm going to have people on to tell unusual and sometimes far-fetched stories about their families. I've heard my whole life that she invented the margarita. And then we're going to investigate those stories and find out how much of it is true. He gets a patent one month before the Wright brothers.

28:03Oh, my God. Please follow and listen to Family Lore, an Odyssey podcast available now on Apple Podcasts, Spotify, or wherever you get your shows. Yeah, let's talk about that journal article. It came out on Thursday night, four bylines. And to me, the headline of that story, because there have been rumors out there of, you know, Fox is really the ones that are pushing this. And they actually have - Everyone I talk to, which means everyone you talk to for sure, says this is Murdoch's work. This is what they were telling us. Well, it certainly follows a blueprint. And some of the pushback I would get on that is like, oh, well, David Ellison is in the Oval Office every other week and they're doing the UFC over there.

28:47But this does not appear to be a Paramount-induced push. Because, for goodness sakes, Both things can be true. Ellison may have a vested interest in this as well. But what we know, or at least the journal's reporting, seems to indicate is this is very much a Rupert Murdoch thing, first and foremost. Well, I do believe Paramount has Paramount+. And as it does deals, It doesn't want to hurt a streaming platform because that's a big part of its business. And so Fox, it does have Tubi, but it's not a big part. And it does have Fox 1, I guess, but it's not a big part of Fox's, as big a part of Fox's business as, say, Peacock is to NBC or Paramount Plus is to CBS.

29:34Should we spell out to your listeners slash readers what the journal article was in case they haven't read it? Go right ahead. So essentially, they've got Rupert Murdoch at a White House dinner in February, leaning over Trump and saying the effect of, hey, we need some help. The NFL is doing all these deals with Amazon, YouTube, Netflix, and these streamers, and that's bad for us. It's going to reduce our leverage when it comes to renegotiating our deal. But most importantly, we need to have football on Fox, and it's important for America to have football on broadcast TV. Cut to two weeks later, there's an FCC investigation.

30:14A month later, there's something from the DOJ. and basically saying this is the federal government's interest in the NFL's media deals. The fact that it's under scrutiny has been spurred on by Rupert Murdoch, who would like to, it basically is a way for him to regain some leverage in these negotiations, which is a fascinating thing to report. And by the way, it's reported in the Wall Street Journal, which is owned by Rupert Murdoch, which is pretty interesting. And by the way, this February meeting that Donald Trump had with Rupert Murdoch, That happened while Donald Trump was suing News Corp and the Wall Street Journal and Rupert Murdoch personally for$10 billion about an Epstein story they published last fall, which just goes to show you that some people can sue you for some people get sued for$10 billion and still want to do business with you.

31:02if you're the president of that space. You know what my favorite part of that story is, is that the journal had two of their best DC reporters on the beat and they tried to figure out what is the Justice Department doing? What is this inquiry that they have? And these two reporters, very plugged in reporters, couldn't find anything on it, which to me, when they included that high up in the story, just kind of suggests that it's all kind of BS, right? It's a journal sort of opening up an inquiry almost as a favor and that there's very little teeth there. We all know, like I think Brendan Carr told Bloomberg that he has no teeth on the Federal Communications Commission, the FCC's inquiry as well.

31:50What happens, especially in this second Trump administration, is that Donald Trump wants something to be done. He wants agencies in the federal government who might theoretically be independent to do that work on his behalf. And even if those agencies can't make it happen, they at least need to show Donald Trump that they are expending energy to do it. So if the FCC, you could order up an investigation and make sure there's a headline that Donald Trump can see. We'll spare the rest of the political discussion. But yes, it's always possible that Brendan Carr and the folks at DOJ are acting independently.