Good morning. Live sports has become a strategic battleground for media companies and technology platforms competing for consumer attention and advertising dollars. Disney CFO Hugh Johnston also sees it as a driver of customer lifetime value.
Johnston didn’t mince words about the state of live sports. “It’s just on fire,” he said during a question-and-answer session at the Goldman Sachs Communacopia + Technology Conference on Wednesday. “People just can’t get enough of it, and our advertisers can’t get enough of it.”
It’s a strategic bet Disney has been building for years: Live sports isn’t just a content category anymore; it’s connective tissue for Disney’s broader consumer ecosystem, from ESPN to Disney+.
In its fiscal Q3, Disney’s sports segment, primarily ESPN, generated $4.5 billion in revenue, up 4% year over year, driven by subscription and affiliate fees and advertising, the company reported last month. Entertainment SVOD, which includes Disney+ and Hulu, grew 11% to $5.53 billion. Across the two segments, advertising revenue topped $2.8 billion, with sports advertising up 5% offsetting a 1% decline in entertainment advertising.
That divergence helps explain why Johnston is leaning into sports. As general entertainment advertising softens, live sports remains a reliable draw for both viewers and advertisers.
“In terms of sports rights, we’re actually pretty well locked up through 2029 or 2030,” Johnston said. He cited “creative deals” with the NBA, NFL, MLB and NHL, giving ESPN its “base load” of marquee content for years.
But Disney (No. 44 on the Fortune 500) isn’t trying to obtain rights to every sports property. Johnston specifically cited Formula 1 (F1) as becoming too expensive, saying Disney chose to put its spending elsewhere. The message from the CFO: Own the rights that matter, but at prices that protect ESPN’s margins.
“Sports to drive ad dollars and engagement is absolutely a core part of Disney’s business,” Morningstar Senior Equity Analyst Matthew Dolgin told me. Sports also helps keep ESPN important to the pay-TV bundle and gives Disney a way to attract consumers to the ESPN app who don’t subscribe to traditional pay TV.
Integrating sports more deeply into Disney’s streaming ecosystem is more complicated, Dolgin said. Disney has begun putting some ESPN content on Disney+ and offers bundles combining ESPN, Disney+ and Hulu, aiming to boost overall streaming subscriptions and engagement.
Ad spending is diverging across industries
Johnston also offered a glimpse into the advertising environment. Technology and AI advertisers are “doing very, very well,” along with political spending and health care. Consumer packaged-goods companies, restaurants and telecom carriers are facing more pressure.
The telecom example illustrates a broader trend: Advertisers are concentrating budgets around a small number of must-see events rather than spreading spending broadly. For Disney, whose ESPN strategy is built around those unmissable moments like College GameDay, the NBA Finals and Monday Night Football.
And that’s potentially a significant tailwind, as long as ESPN keeps landing the biggest games.
Sheryl Estrada
Sheryl.Estrada@fortune.com
Leaderboard
Michael Brous was promoted to CFO of rideshare company Lyft, Inc. (Nasdaq: LYFT), effective Sept. 28. Brous takes over from Erin Brewer, who plans to retire and will remain with Lyft as an advisor through Dec. 15. Brous has served in Lyft senior management for nearly eight years, currently as head of Lyft Urban Solutions and Safety and Customer Care. He joined Lyft in 2018 through its acquisition of Motivate, where he was the VP of finance.
Peter G. Clifford was EVP and CFO of Fortune Brands Innovations, Inc. (NYSE: FBIN), a home, security and digital products company, effective Sept. 21. Clifford brings more than 30 years of experience, including CFO and COO roles at The AZEK Company and Cantel Medical. Most recently, Clifford served as CFO for Filtration Group Corporation.
Big Deal
Deloitte's Finance Trends 2027 report explores how finance leaders are increasingly operating in a dual role, leading not only transformation within finance teams, but also shaping how enterprise-wide tech and AI investments are governed.
More than half (54%) of surveyed finance leaders lead enterprise AI and technology capital-allocation decisions, while 48% lead on AI trust and 48% oversee AI and technology spending and cost controls. In addition, nearly half (43%) identify embedding AI and advanced technology into operations as a top priority through fiscal year 2027.
Meanwhile, sovereignty is reshaping investment: 84% expect technology sovereignty—including data residency, vendor relationships and supply-chain resilience—to reshape capital allocation decisions. 63% see it as a strategic differentiator.
Another key finding: AI adoption advances, 60% of finance leaders say they will need more sophisticated AI cost-management practices through 2027. Those preparing for this shift are further along in their AI journeys, with higher rates of fully embedded AI productivity tools in finance (64%) and FinOps capabilities (38%) than those maintaining current practices (51% and 25%, respectively).
The findings are based on a global survey of 1,434 finance leaders at public and private companies with revenues of at least $1 billion.
Going deeper
Tech giant Apple unveiled its first foldable smartphone on Wednesday—the iPhone Duo. It will cost $1,999 for the 256-gigabyte version and be available Oct. 23, Fortune's Sebastian Herrera reports. Apple is also selling a two terabyte version for $3,199.
"The phone has a 7.6-inch display when opened and a 5.4-inch outer display when closed," Herrera writes. "It will also work with Apple Pencil, and it can be viewed in several display modes, including half-folded on a table." To learn how this device pushes Apple into a new era, read more here.
Overheard
“Over time, we believe EVs are the end game because of the styling and what they enable—instant torque and never having to go to the gas station.”
—General Motors Chair and CEO Mary Barra said this during a conversation with Fortune’s Editor-in-Chief Alyson Shontell in a new episode of Fortune 500: Titans and Disruptors of Industry. Shontell sat down with Barra to discuss her approach to fierce competition from China, shifting EV policy, the rise of AI and autonomous vehicles, and how she intends to steer the company into the next century.