Jim Cramer Calls On Disney CEO Bob Iger to Ditch ESPN Because It’s Too Costly: ‘I Like the Idea’
CNBC’s Jim Cramer wants Disney’s CEO Bob Iger to sell ESPN because the sports network does not make its parent company enough money.
Wells Fargo analyst Steve Cahall explained the bank’s top predictions for 2023, and in a note, he stated that Wells Fargo predicts that Disney will sell ESPN and ABC.
“We think Bob Iger is returning to DIS ready to make big changes,” Cahall wrote. “ESPN traditionally is the cash cow is neither owned-IP (Intellectual Property) nor global the way DIS is. With linear and sports trends diverging from core IP, we think severing the company is increasingly logical.”
Squawk On The Street host David Faber read that Wells Fargo estimated that ESPN and ABC’s operating income in 2023 would be worth $2.5 billion before depreciation.
“They could send a lot of debt with ESPN,” Faber said to Cramer. “Help their balance sheet a lot.”
Cramer agreed that Disney should sell off ESPN and ABC and believed ESPN did not use their products enough because he had just gotten done watching Monday Night Football.
“We watch ESPN, like last night you watch ESPN football and realized they have not fully used their library,” Cramer added. “I think they themselves have reduced cost at a phenomenal rate since Bob ran DIS last time. I like the idea.”
“Again, just cause it’s a paper from an analyst doesn’t mean in any way that it’s something Iger is thinking about seriously,” Faber continued. “Just don’t know, but by the way, if they are, they’ll also be some potential buyers then; you may not want to just spin that thing cold.”
Cramer pointed out how much money the NFL can bring in since Apple will not pursue the NFL’s Sunday Ticket, and he praised how well ESPN promotes daily fantasy.
“Apple dropped out; there’s too many people in the Direct TV thing,” Cramer said. “I think that both Amazon and, maybe to a less degree, Google understand somewhat gambling. Neither seems to understand that the fourth quarter in the NFL is watched cause of DFS, cause of daily fantasy, and because of regular fantasy.”
“There’s 55 million people that play fantasy. None of these people seems to have a clue, with the exception of ESPN, how to profit off of that,” Cramer continued.
Cramer also believed there would only be two buyers who could afford ESPN and ABC.
“Unless you’re Alphabet or Amazon, you don’t have the money,” Cramer continued.
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