According to reports, ESPN and the NFL are in the final stages of negotiations for the league to become a part owner of the worldwide leader. Iger has talked publicly about his desire to find a “strategic partner” for ESPN, and it appears he’s done it.

Here’s the thing, however, I think he’s picked the wrong one.

I get the logic behind the deal.  The NFL is far and away ESPN’s most important content partner.  Under no circumstances can the network survive without it, so this deal guarantees them a seat at the table with the biggest, baddest television property in the country.  It’s also a win for the NFL as it gets the league out from under its underperforming, middling television network by placing it in the hands of the best sports production company anywhere.

But the move also feels defensive and unimaginative. It’s as if a bunch of executives steeped in the dogmas of traditional linear television said to themselves the most important thing we need to do is to ensure that we don’t lose access to the programming that is the lifeblood of our business.  Every decision maker at Disney and ESPN is old enough to remember what happened to CBS when Fox stunned the world and stole its NFL package. 

But ESPN’s problem is not programming.  It has the best sports content anywhere.  The network doesn’t need help shoring up its content relationships, what it needs is to reinvent its business model.  That requires radically rethinking the way the product is constructed, presented, and distributed.  ESPN needs to reverse engineer the business not through the lens of programming, but from the perspective of the consumer.

With apologies to James Carville, it’s the audience, stupid.  Start with the audience – where they watch, how they watch, what they will pay for and what do they expect for free.  Do they prefer highlights, analysis, live events?  And in what format?  That’s not programming, it’s product marketing 101.  And partnering with the NFL addresses none of those issues.

Look, Bob Iger is unquestionably brilliant and one of the greatest CEOs in recent memory.  I have a ton of respect and admiration for him and the leadership team at ESPN. They are the best in the business.  But let’s be honest, Iger is unabashedly a TV guy through and through.  His love affair with sports television dates to the glory days of ABC Sports.  The dogmas of the traditional linear sports television business are ingrained deep in his psyche.  For all his genius, I think Bob can only see ESPN through the singular lens of television.

What Iger and the ESPN team need is a partner who can expand their horizons, cover their blind spots, view the business coldly and rationally based on current marketplace conditions.  It needs a partner with proven experience delivering and monetizing content to diverse audiences globally at scale on all platforms.  A partner that can revamp and rebuild the product from the ground up, that brings an entirely different set of capabilities, skills, and perspective.  And it would be nice if that partner also was extremely well capitalized since sports content is incredibly expensive.

The partner ESPN needs is YouTube. 

YouTube is the #1 media company in the world, trapped inside Google.  (That in and of itself is incredible).  Viewers spend more time on YouTube than any other platform.  Its tech stack is second to none.  It’s revenue is growing and it’s wildly profitable.  It serves all types of viewers – from those interested in long form premium content to those who like watching :23 second homemade cat videos.  And with the success of YouTubeTV and Sunday Ticket it’s proven that it can deliver premium live sports at scale.

YouTube is the king of media today because it has the best technology, the best product, and a deep understanding of consumer viewing behavior grounded in an unmatched, proprietary data set.

Imagine if somehow Iger could convince Google to spin off YouTube and combine it with ESPN to form an entirely separate company.  The technical expertise and capabilities, reach, data, consumer insights, programming, and brand affinity of the new combined company would be unbeatable.  Unburdened by forty years of linear television legacy thinking, YouTube/ESPN could not only reimagine how to serve sports fans where they are and how they want it, but also be sufficiently armed with the necessary financial and operational muscle to execute successfully.

It also would be a big win for Alphabet/Google.  Operating inside Alphabet, I don’t think YouTube gets enough credit among investors for what it has accomplished.  Spinning it off could unlock a ton of value for shareholders and allow Alphabet to better focus on the core businesses of search, cloud, mobile and AI.

To be fair, I’m no M&A expert so it’s quite possible there are countless financial hurdles that could make a YouTube/ESPN spin off difficult, if not impossible, to execute.  Maybe Iger and team have talked to Alphabet about it.  But I tend to doubt it, Iger doesn’t seem interested in any scenario that involves Disney giving up control of ESPN. 

But from a strategic perspective an ESPN/YouTube spinoff brings much more to the table than an equity investment from the NFL.  ESPN is a great brand that still has enormous potential but it has languished too long inside Disney.  As I’ve written before, it’s time for a change.  Clearly the thought of letting go of ESPN is anathema to Iger, but if somehow he could find it in himself to do so, it would be his crowning achievement and his reputation and legacy as the greatest CEO in modern history would be forever solidified.