The beating heart of The Walt Disney Corporation (DIS -2.68%), at least from a financial perspective, is the company's media networks division, which provides approximately half of the company's operating income. Within the media networks division, Disney has ESPN to thank. By becoming the de facto network of the NFL, NBA, and MLB, ESPN can lay claim to the title of the most lucrative cable channel.

More recently, however, ESPN's relationship with sporting leagues has become less profitable. The ability of fans to get scores and highlights on demand from multiple sources has led to subscriber losses and forced the network to adapt. The company's tentpole SportsCenter show, once the mecca of sports highlights, has adjusted to a more conversational format, including a late-night approach with Scott Van Pelt and moving hosts Michael Smith and Jamele Hill to the coveted 6 p.m. slot.

Four friends on a couch, cheering while watching a sporting event.

Image Source: Getty Images.

While ESPN is in a vicious fight to hold on to subscribers, the cost of league rights has exploded. The recent deal with the NBA cost ESPN and Turner Broadcasting, a division of Time Warner, a combined $2.6 billion per year, nearly 200% more than the prior contract. Monday Night Football, a deal which consists of 17 games, costs the network $1.9 billion per year, 73% more than the prior contract.

ESPN may drop NFL games

James Andrew Miller recently wrote in The Hollywood Reporter that ESPN may elect not to extend its NFL Monday Night Football rights after the current deal expires in 2021. At least it's now securing agreements with affiliates that seem to make that a possibility.

Wrote Miller:

ESPN has been able to pull off a dramatic judo move in recent agreements with its affiliates, one whose importance cannot be overstated: There is no longer specific contract language that requires the cable giant to have NFL games in order to earn its lofty (and industry-envied) subscriber fees, currently more than $7 per household.

It's understandable why Disney would want this optionality, as NFL viewership growth has reversed. Reasons for fans' tuning out include: America is divided about the kneeling protests; there's a growing awareness of the danger of on-field concussions; some fans think league rules to prevent concussions have gone too far; some are turned off by game stoppages and a commercial-crammed viewing experience.

Regardless of the reasons, league viewership is sagging, while carry rights keep climbing.

The better question: Is ESPN best for the NFL? 

When analysts discuss ESPN's relationship with the NFL, it's always prefaced from the perspective that the league has all the power. Perhaps that's not the best way to assess the situation. The NFL owes its success, at least in part, to ESPN, which, stretching back decades, has acted as a marketing and PR shop for the league. The result has been a symbiotic relationship that's been profitable for all entities, a rare win-win in business.

A big tech company or other network could win the Monday Night Football deal, but it's unlikely they would have, or will have, the cultural impact and focus of a dedicated sports television outlet. NFL Commissioner Roger Goodell may make NFL owners more money in the short term with a streaming deal with cash-rich giants Apple, Facebook, or Amazon, but the long arc and sustainable path is a multichannel angle that continues to emphasize television -- at least until streaming proves itself as a viable and popular broadcast format.

The devil is in the details

When ESPN re-upped its Monday Night Football deal, it paid more than CBS and Fox on a per-game basis, but received a lot more than game broadcast rights in return. For example, ESPN received expanded rights for video highlights, the ability to expand NFL Countdown and NFL Live, and streaming privileges. It could be possible for ESPN to unbundle and continue to pay for these rights, even if the company chooses not to carry Monday Night Football games. In fact, it may be the company's wisest and most financially prudent move to do so.