  A NFL ESPN partnership cemented in equity would effectively underwrite ESPN as a key transition partner over the next 10  years as the NFL likely moves from linear-first rights deals to streaming-first. Considering that the streaming shift likely implies new bidders such as Apple  NASDAQ AAPL  and Amazon  NASDAQ AMZN , a potential partnership suggests that  ESPN has a critical role to play through the changes. ESPN  DIS  and the NFL are reportedly engaged in advanced discussions regarding a potential equity stake, although the likelihood of a deal remains uncertain. We believe DIS sentiment has a higher floor on cost cuts, DTC margin improvement, ESPN DTC coming and FY24's strong FCF guide. ESPN DTC launching in est. The analysts noted that investors do not anticipate an agreement between ESPN and any sports leagues, despite previous reports of talks last summer, to which neither party has provided official comments. According to the NY Post, the talks have progressed to a point where owners and players are being informed, adhering to the revenue-sharing terms outlined in the collective bargaining agreement  CBA .If materialized, the deal could potentially involve ESPN taking control of NFL Media. An equity deal with ESPN might be viewed skeptically as it could potentially put the NFL at a disadvantage in future rights negotiations with other bidders, raising concerns about conflicts of interest, Wells Fargo strategists added. In essence, the potential for a deal between ESPN and a sports league represents a positive prospect, as it could contribute to an increased ESPN terminal value and decreased risk for ESPN Direct-to-Consumer  DTC  initiatives.  ESPN may be able to improve carriage of NFL Network and or Red Zone, improving near-term cash flows  good for the CBA .
ESPN and the NFL are in advanced discussions regarding a potential equity stake, which could involve ESPN taking control of NFL Media. If materialized, the deal could potentially increase ESPN's terminal value and decrease the risk for its DTC initiatives.