Disney Shares On The Move Amid Conflicting ESPN Spinoff Reports

Shares of Walt Disney Co. DIS temporarily spiked Friday on a news report the company was looking to spin off its ESPN sports operations, which Disney denied.

What Happened: The website Puck News published a report that Disney CEO Bob Chapek was actively discussing the separation of ESPN from the company. Citing “two sources with knowledge of the matter,” the report claimed there are “are now conversations happening regularly at Disney about whether or not to spin off ESPN.”

The reason to spin off ESPN, the article insisted was it was a “zero-to-low-growth business” facing a near-future of diminished subscriber levels and advertiser revenue that is hampered with “expensive, long-term rights deals that keep the most popular sports programming on linear and off of ESPN+.”

With ESPN out of the way, the article’s sources claimed, Disney could go “all-in on streaming, which could pop the stock and deliver meaningful shareholder value.”

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What Happened Next: The Puck News report caused a brief stock pop, with Bloomberg reporting Disney shares rising by as much as 2.6% when the story went live. However, the story was quickly shot down by CNBC, which offered its own unnamed source to refute Puck News.

“After Disney shares jumped to a session high on a report that said the company is looking into potentially exploring an ESPN spinoff, a source tells CNBC the report is inaccurate,” tweeted CNBC. “The source tells CNBC the company aims to pursue further value through ESPN+ and sports betting.”

100%. As I said in report, some see ESPN’s forthcoming betting licensing deal as foreplay for a post spin-off merger with a sportsbook, via a Reverse Morris trust.

— Dylan Byers (@DylanByers) October 15, 2021

DIS Price Action: Disney's stock closed at $176.52 a share, up 1.17%.

Photo: Disney Parks.