Disney's ESPN faces rising rights fees: report

(Reuters) - Walt Disney Co’s ESPN cable sports network, which has broadcasting deals for events ranging from the National Football League to Nascar, is facing higher costs while renewing some of the contracts amid falling advertising revenue, the Wall Street Journal said on Monday.

Since Disney acquired 80 percent of ESPN in 1995 the most-watched U.S. sports channel has become one of the company’s most valuable properties, providing $4.1 billion in operating income in fiscal 2008 ending September 27, the newspaper said.

However, ESPN is feeling the impact of the recession and its advertising revenue is declining even as costs associated with many of its rights deals increase on schedule, the paper said.

ESPN’s NFL payments nearly doubled from $600 million during the last round of negotiations, and each of its other major rights fees rose by at least 20 percent, a trend most industry people expect to continue, it said.

ESPN spends about $2.2 billion annually for the broadcast rights to major sports in the U.S. alone, the paper said.

Walt Disney could not immediately be reached by Reuters for comment.

Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by Greg Mahlich