00:00:00 Speaker A
joining me now is Hugh Johnston, uh Disney's chief financial officer. Hugh, fresh off your earnings call. Thanks for hopping on Yahoo Finance. Uh you heard me probably talking to Julie about some of these deals, the NFL deal, big deal, uh this morning WWE deal, big deal. Let's start on the NFL. 10% stake, uh that you're giving the NFL for ESPN. That's a very large number, Hugh. Why is it worth it?
00:00:35 Hugh Johnston
Oh, I think it's completely worth it. And good morning to you, Brian and Julie. Great to be with you guys again, as always. Uh really we we feel terrific about the assets that we'll be getting for for the the deal. The combination of the NFL network and all of of what that brings. In addition to that, uh combining our uh our fantasy football business with the NFL's fantasy football business, plus the ability to market Red Zone. Uh overall, we feel terrific about that. Now obviously, there's uh three additional games we'll be getting as well, which are of of significant significant value to us. So, as we think about it, we think about it from two perspectives. Uh number one is the impact it's going to have on the ESPN DTC business, which we think will be super positive. And then second, obviously putting the NFL network together with ESPN will create both revenue and cost synergies. Uh the outcome of that from an investor perspective is it'll be accretive by about a nickel uh before purchase accounting. So, we think it's a great deal for uh for the NFL, and we think it's a great deal for ESPN as well, which is uh the the best of all worlds.
00:02:42 Speaker A
You have seen ESPN various uh estimates in terms of valuation, 25 billion, even as high as 30 billion. That would make this NFL stake up to worth about what? $3 billion. Is that correct? Do I have my math right?
00:03:01 Hugh Johnston
Uh your math is correct, although we we haven't talked about the value of of ESPN uh or the value of the assets because what we're doing here is exchanging equity and ESPN for the assets and the income streams that we're getting. So, we haven't really put a specific valuation on it. As I said though, the thing I can tell you is it's accretive to the Walt Disney Company. So from a financial terms perspective, we're very happy with the financial terms.
00:03:40 Speaker A
You as you know, Red Zone has a sacred following, very passionate uh base in terms of that programming. Does do you and and Bob Iger, CEO, do you envision ESPN talent going onto that platform?
00:04:05 Hugh Johnston
You know, we we haven't talked about it at this point. It's it's probably a little bit too early for us to go there. Uh I know that the the guy who hosts ESPN, a a fellow Syracuse University graduate, by the way, uh does a fabulous job. So uh I certainly expect us to to continue and if anything try to be additive to to that uh to that capability because it's such a good one.
00:04:54 Speaker A
Now, the deal of course has to get uh approved by regulators. What is Disney willing to give up to get this approval from the Trump administration, which has not hidden its uh views on on traditional mainstream media?
00:05:22 Hugh Johnston
Well, uh I'm I'm hopeful we're not going to have to give up anything, to be honest with you. We we don't see it as as uh in any way anti-competitive. Actually quite the opposite. The way we think about it is this is so pro consumer. Uh it really makes their lives easier. Sports fans, it's a bit of a challenge right now because content is is spread across so many different places. Uh and we view this as a convergence that we actually think will make it uh easier for the sports fan. And in addition, uh it'll give them uh the the capability that we have as ESPN to produce fantastic content. And in addition to that, with the ESPN DTC launch, we'll be able to to bring a lot of new capabilities as we innovate for the consumer as well, around things like uh multi-view games and personalization of uh of Sports Center, uh and in addition to that fantasy and and betting and and enhanced uh enhanced statistics. So uh we view this as super, super pro consumer and and are certainly positive from that perspective. And as I said, we we think it's a great deal for the NFL owners and the NFL players as well. So, this is truly a win all around. We're we're hoping that the regulatory process will go extremely smoothly.
00:07:37 Speaker A
Here, $1.6 billion for a five-year deal for WWE. I'm a WWE fan. It's good to see uh WrestleMania and other events being on one home. What's the return on investment you're looking for? Uh that also is a very large number.
00:08:02 Hugh Johnston
Yeah, it it's a big investment, but we we do expect positive financial returns from the investment. So, uh from that perspective, we we haven't gotten any deeper than that, but uh the beauty of where ESPN right now is, is with the NFL, with the NBA, with college football playoff, SEC, uh and NHL. We we have so many, uh such a good load of a volume of really high quality content. We can pick and choose where else we we want to be. And as a result of that, we're in a good position to strike good financial deals for ourselves. So we expect this to be another good financial deal for ESPN.