Disney Extends NCAA Rights - Analyst Blog

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According to ESPN media zone, The Walt Disney Company ( DIS ) recently entered into a multiyear agreement with the National Collegiate Athletic Association (NCAA) for international broadcasting rights of Men's Basketball.

The newly announced deal will be effective immediately and runs through 2023-24.

Deal Details

According to the pact, Disney will shell out $500 million over the tenure of the deal for the extension of its international broadcast rights to 24 NCAA championships and exclusive broadcasting rights beyond the U.S. borders for the NCAA Division I Men's Basketball Championship.

Moreover, it also includes 600-plus hours and 300 telecasts of live coverage yearly across multiple platforms.

Earlier in September, Disney extended its broadcast rights deal with the National Football League for eight more years. The company will pay $15.2 billion over the tenure of the deal.

The NFL deal includes digital rights of NFL-branded programs, 3D distributionand the right to air games on web enabled mobile devices. Further,it also includes bigger international broadcasting rights.

The NFL deal marks a substantial increase in the cost of broadcasting-rights when compared with the current deal. Disney will pay approximately $1.9 billion per season over the tenure of the deal, up approximately 73% from the current $1.1 billion per season.

ESPN Value Offsets Costs

Due to huge viewer demand and surging games ratings, prices of the sports rights marked a sharp rise in the recent past. It is due to the high cost of sports programming that ESPN has become the most expensive cable network in the U.S.

We believe that Disney might hike fees for pay-TV distributors with affiliate fees and advertising providing an opportunity to hedge against the rising cost.

The company stated that the success of ESPN continued as the later witnessed a record number of viewers for the fourth consecutive year, while remaining the favorite destination for sports lovers.

In last few years, ESPN with its right mix of exclusive sporting licenses with top sporting leagues emerged as an industry leader in the pay-TV industry.

Moreover, ESPN was the key driver of revenues at the Media Networks division in recent times.

Wrapping Up

Walt Disney is one of the world's leading diversified entertainment companies. Moreover, the company commands a formidable portfolio of globally recognized brands, primarily its namesake brand Walt Disney, followed by ABC, ESPN and Marvel Entertainment. These renowned brands offer a strong competitive edge to the company and bolster its well-established position in the market against major players like News Corporation ( NWSA ) and Time Warner Inc . ( TWX ).

Such moves not only fortify its position but also expand its coverage area while creating long-term opportunities.

Currently, we maintain a long-term Neutral recommendationon the stock. Moreover, Disney's shares hold a Zacks #3 Rank, which translates into a short-term Hold rating.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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