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The Refresh News: August 11 - ESPN Goes All-In: Disney's NFL Bet, Instagram Imitates, and Meta's Engagement Obsession
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Get in Refreshers we're going to Disneyland. Not really, but we will spend a good chunk of time with the House of Mouse today. I'm Kate with marketexture and this is the Refresh, your weekly download on what went down in advertising today. Today is Monday, August 11th, and this week on the Refresh, we're talking about Disney's earnings and their big ESPN NFL announcement, as well as Instagram's new features and then a rapid fire roundup of key headlines from this week that are smaller but just as mighty and worth making mental note of. So let's get into it, starting things off with the big story for this week. Disney's ESPN NFL Deal. ESPN is acquiring full operational control of the NFL Network, expanding its portfolio of live sports channels. As part of the agreement, ESPN also gets the right to distribute the NFL's Red Zone channel to pay TV providers. But the league will continue to own and produce Red Zone, as well as NFL Films, NFL plus and the NFL Podcast Network. Alongside that, ESPN will acquire NFL Fantasy, giving them control over this fantasy platform and their own. In exchange, the NFL is acquiring a 10% equity state in ESPN, valued somewhere between 2.5 and $3 billion. That's a bold bet on ESPN's future, and it gives the league a meaningful voice in how its content is distributed across platforms. This deal sets a dramatic stage for ESPN's highly anticipated direct to consumer streaming service, which officially launches on August20. It'll cost $29.99 a month, and for the first time ever, fans will have access to all of ESPN's content, including the NFL Network. Without a Cable subscription, that's 47,000 live events per year available at the Touch of a Button this is a watershed moment for both ESPN and the NFL. For the NFL, it offers long term distribution security. As more viewers cut the cord for espn, it gives them premium content that can supercharge their standalone app, which is critical as the economics of cable continue to unravel. As Jimmy Pitaro, chairman of espn, put it together, ESPN and the NFL are redefining how fans engage with the game anytime, anywhere. The new ESPN app won't just be a stream of live games, though, it will also feature enhanced stats, betting integrations, fantasy football tools, personalized sports center feeds, short form video and even shopping. Disney CEO Bob Iger noted the NFL Network will be seamlessly integrated into the app, bringing three exclusive NFL games to the platform each season plus full rights to the NFL draft. Also worth noting, aspects of the deal could increase revenue for the league, with chair of the league's media committee Robert Kraft suggesting it could lead to higher salary caps and stronger negotiations with the players union. Of course, the deal is still subject to regulatory approval, given it involves two of the most powerful players in the sports universe and a significant exchange of valuable assets. Approval is expected to take about a year. In other sports news, Disney also locked in exclusive streaming rights to WWE's premium live events and a $1.6 billion, five year deal. Putting all of this into perspective, it's also important to keep in mind the moves Disney has been making behind the scenes to enable real time programmatic transactions during live games, spearheading the next era of primetime sports advertising. Now let's zoom out to Disney's broader earnings picture. Revenue for the quarter came in at $23.7 billion, up 2% year over year. ESPN generated $3.9 billion in revenue, but its operating profit fell 7% largely due to rising sports rates costs. The company's traditional linear networks business took a hit, with revenue down 15% and operating income dropping 28%. The key culprits? Cord cutting, audience erosion and softer ad rates. On the other hand, streaming added some magic to Disney's earnings report. Their direct to consumer segment, which includes Hulu and Disney, posted a $346 million profit, a huge swing from a $19 million loss the same time last year. Earnings from their streaming biz make two things very clear. Disney is all in on streaming profitability and the ESPN NFL deal, plus the Hulu integration are the most visible proof of that strategy in action. Speaking of Hulu Disney confirmed that the platform will be fully integrated into Disney plus sometime in 2026 as a dedicated tile. All in all, Disney's making big moves to evolve into a leaner streaming first company by bundling content, owning more IP and reinventing sports and the advertising opportunities they contain for the streaming age. Next up, Instagram dropped three new features, all of which are giving I think I've seen this film before. The first feature A repost tool that lets users share reels and grid posts from other accounts straight into their own feed. This is a clear dupe of TikTok's repost feature and makes you wonder if stories and DMs on Instagram will continue to be the preferred content sharing mechanism, or if reposts will ultimately win user affection. As someone who uses this feature in TikTok, it's dead useful and I like the way reposted content is inherently curated by accounts I follow and have already given a vote of confidence to. But I only use reposts for content I think would be enjoyed by or useful for everyone that follows me. I the next feature A location sharing map in DMs Yep, this is Snapmap reincarnated. It's opt in and shows where your friends were last active, plus geotagged content from stories like your friend's favorite brewery or buzzy events like music festivals. This feature rollout brought out the angry mobs, complete with pitchforks and plenty of misinformation, with the irony being that it was amplified by Meta's own algorithms. We don't necessarily have time to get into it here, but I think it's worth pausing a minute to evaluate the discourse that's been sparked around user privacy preferences, Internet communications, information spread, and the value of brand trust when stepping into sensitive information territory. The last feature update Instagram announced was the ability to control visibility into how you and those you follow engage with reels content through likes and comments. This will also be aggregated into a dedicated Friends section of the Reels tab. To me, Meta's product strategy continues to feel directionless and at times desperate, trying to be everything to everybody to pump engagement, a word that was mentioned 17 times on Meta's recent Q2 earnings call, and which Mark Zuckerberg pinpointed as the driving factor behind revenue performance, stating there are two primary factors that drive our revenue performance our ability to deliver engaging experiences for our community and our effectiveness at monetizing that engagement over time for advertisers, content creators and users alike. You will continue to exist in the world that Meta has built and play the game by their rules because doing so benefits their bottom line. As part of this, Meta continues to play a powerful role in the lives and livelihoods of all those who use their platforms for advertisers. Consider how you can create strategies that withstand Meta's constant algorithm tweaks, sporadic feature rollouts, and prioritization of their objectives, particularly when it comes to your relationships with and investment in content creators whose reach and impact is particularly susceptible to Meta's whims. Alright, let's wrap things up by getting into this week's rapid fire roundup. First up, we have Omnicom and ipg, who just cleared another regulatory hurdle on the path to their long anticipated merger, this time with the UK's competition and markets Authority. They're still waiting on a few other approvals, including from the European Union, but an agency with the Abbreviated name of OmIPG is getting closer to reality. In more good news For Omnicom, OpenAI has officially named PhD, an Omnicom subsidiary, as its agency of record. Next up, OpenX just sued Google, piling on in the wake of Google's landmark loss in their ad tech antitrust case versus the DOJ. And it may be a happy coincidence the release of our very own Ari Paparo's book Yield, which chronicles the events leading up to and surrounding Google vdoj. What's that saying? Strike while the iron is hot. Moving over to the AI corner, cloudflare just accused Perplexity's AI web crawlers of going undercover. According to them, Perplexity's web crawlers have been disguising their identity to get around protections meant to stop unauthorized content scraping. Perplexity claims it's just fulfilling user agent requests, but it's not the first time they've been caught seemingly using nefarious techniques to get at content, including busting past paywall's Kool Aid man style, ignoring robots Txt files and sidestepping web application firewalls. And finally, to close things out, ChatGPT is getting more emotionally intelligent. OpenAI is adding mental health safeguards to help users who may be showing signs of distress or overreliance on the chatbot. The updates include encouraging users to take breaks during long sessions, recommending evidence based resources around sensitive or vulnerable conversations, and asking questions to help users unpack their circumstances, rather than giving direct advice when people are clearly in emotional turmoil. All right, lot of news coming down the pipeline for this week's refresh. Thanks for joining us and we'll catch you next week.