JUANA SUMMERS, HOST:
The self-proclaimed worldwide leader in sports has just got an in to the sports gambling business. ESPN struck a deal valued at $2 billion with an online betting company. NPR media correspondent David Folkenflik joins us now to explain why this is a big deal in every sense and to explain some of the concerns. Hey, David.
DAVID FOLKENFLIK, BYLINE: Hey, Juana.
SUMMERS: Hey. So just to start, can you describe this deal and - for what is being called ESPN Bet and how it works exactly?
FOLKENFLIK: So ESPN's not becoming the bookie. That's not going to be the site that you go to to place your bets. But it is essentially renting out its brand to PENN Entertainment, which had had an online betting outfit. It's challenging some of the bigger named, you know, online bookie firms like DraftKings, FanDuel. And what they're doing, essentially, getting $150 million and giving it to ESPN every year for the next decade and giving ESPN a stake of about $500 million to do so.
Now, Disney thinks of itself and presents itself as a family-facing company. And this was something that Bob Iger, long the head of Disney - went away for a bit, came back - said he wasn't going to do and then said he would do only reluctantly. They're now doing it whole hog. And one little interesting side note, PENN Entertainment, in order to strike this deal, this partnership with Disney, has dropped its other partner, what had been an upstart sports podcast and media company called Barstool, as a result of the kind of controversial and confrontational nature of the site and also its founder, Dave Portnoy. You know, that wouldn't have been reconcilable with how Disney thinks of itself, even as it enters this new realm of gambling.
SUMMERS: Right. As sports fans like myself are aware, ESPN has been reporting this year quite a bit on players, professional sports players, who are being suspended for betting. And critics out there are saying there's a bit of a conflict of interest here. So why would ESPN take the leap to get into sports gambling?
FOLKENFLIK: Well, so let's deal with the question of conflict of interest. ESPN currently doesn't bar its journalists or commentators, I'm told, from betting on sports. But they basically say, we have standards of conduct, and if there are problems, we manage it. They haven't pointed to any incidents that's a problem. Although it was a concern voiced by journalists at The Athletic, where one of their number did have a deal with a major online gambling outfit.
You know, the reason why ESPN would get into the fray is you've seen subscribers go down as people sort of cut those cords with conventional cable and satellite TV firms. You've seen ad rates go down. You've seen ESPN, as a result, shop around for a partner in streaming platforms for the day where Disney finally offers ESPN directly to the consumer online. And now they're saying, look, we need some way to tap into this industry. It's worth tens of billions of dollars, an estimated $60 billion and growing. They want to get into a revenue stream that's growing. And they want to find ways to partner with PENN Entertainment for this - partner maybe with Major League Baseball or the NFL, some outfit like that, to offer this over-the-top streaming service to consumers directly.
SUMMERS: And this, of course, is just one of the latest in a series of major moves and shifts at the Walt Disney Company since the return of its celebrated CEO, Bob Iger. So what's his plan?
FOLKENFLIK: Well, right now, his plan is to announce that he's going to find a plan. But, you know, listen, streaming is imperiling - you know, not only is it a problem for ESPN, it's imperiling old-fashioned TV. Think of Disney elements like ABC News and some of the cable channels they have. Here's what Bob Iger had to say recently, just a couple of weeks ago, to CNBC's Dave Faber.
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BOB IGER: The disruptive forces that have been preying on that business for a while are greater than I thought. It's eye-opening, you know? There's a reality to it that we have to come to grips with, and we have to come to grips with that now.
FOLKENFLIK: So you may see them decide that cable channels aren't really a core part of what they're doing - a place like Hulu, the streaming service, is. They want to get full control of that. They don't - what it says is ESPN, which was once the disruptor, is now being disrupted. And Disney, celebrating its 100th year, has to find a way to forge a digital path to make it. And it's not certain exactly how that's going to work.
SUMMERS: That is NPR media correspondent David Folkenflik. Thank you.
FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.
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