Disney (DIS) CEO Bob Chapek has big plans for sports broadcasting company ESPN that doesn’t involve spinning it off — welcome news for long-term investors in the iconic entertainment brand. At Disney’s big fan event over the weekend, called D23 Expo, Chapek indicated a strategy was in place to grow and integrate ESPN as another vertical in the broader Disney ecosystem. While he and the company did not disclose details, the comments squashed any speculation that Disney is exploring plans to split off ESPN into a standalone company. Even activist investor Dan Loeb, who originally pushed for Disney to spin off ESPN , reversed his position over the weekend following Chapek’s comments, saying he’s more aware of what the potential synergies could mean for Disney in a series of tweets on Sunday. Chapek separately told Variety that the company “had no less than 100 inquiries of people that wanted to buy” ESPN when word spread that it was potentially up for sale. Chapek’s plans for ESPN are still unknown, but Jeff Marks, director of portfolio analysis at the Investing Club, says all those inquiries mean the asset could be undervalued. “The amount of interest Disney received from its rumors of selling ESPN suggests it is worth more than what the market gives it credit for,” Marks said. Bottom line ESPN’s future at Disney could speak to the entertainment company’s ambitions to get into sports betting, which appeals to its younger audience that is very active in this space. “If they monetize more fantasy and build more on its theme parks, you know that’s what gets the stock back to $150,” Jim Cramer said in the Investing Club’s ‘Morning Meeting’ on Monday. For Disney’s business, this could ultimately mean more streaming revenue in sports, which is growing at a healthy pace. In the company’s fiscal third quarter reported in August, Disney’s ESPN+ streaming service saw a 53% year-over-year increase in paid subscribers to 22.8 million. Moreover, revenue from advertising in this vertical increased 40% year over year. This performance shows that ESPN adds value to Disney’s already robust streaming platform, which has 221.1 million streaming subscribers across its services as of its third quarter results, surpassing Netflix’s 220.7 million. We are also encouraged by Disney’s ability to increase prices, which can help boost revenue during a slowing economy. In July, Disney’s ESPN+ raised the price of its subscription service from $6.99 per month to $9.99 per month. Last month Disney also introduced an ad-supported subscription version of Disney+ where customers can choose different subscription plans at varying price points available across Disney+, Hulu, ESPN+ and the Disney Bundle. This tailored option, which will be available starting Dec. 8, could lead to more customer acquisition, further supporting the company’s desire to reach profitability in its streaming service in fiscal 2024. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
