What Is a Subsidiary? Definition & How It Operates

By Catherine Brock – Updated Jul 5, 2025 at 5:32 PM EST

Key Points

Subsidiaries are over 50% owned by parent companies but act as separate legal entities.
Parent firms merge subsidiary financial results for a consolidated report unless the stake is under 50%.
Disney incorporates ESPN's operational figures into its broad financial statements, enhancing transparency.

A subsidiary is a company that is majority-owned by another company. The owning company, called a parent, can be a functional business selling its own products and services. It could also be a holding company whose primary purpose is owning other businesses.

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Executives in a conference room for a board of directors meeting. — Image source: Getty Images.

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Holding Company

A corporation that owns shares in other companies, exercising control over their management and operations, often with diverse investments.

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For the quarter ending March 30, 2024, Disney reported ESPN revenue of $4.2 billion and operating income of $799 million. Disney also announced that ESPN will launch a standalone streaming channel in 2025. Disney currently offers ESPN+ within a bundled streaming package that also includes Hulu and Disney+. The new standalone ESPN is expected to be part of the Disney+ bundle.

Although subsidiaries are legally separate from their parent companies, they often collaborate. The use of ESPN programming within Disney-branded services is an example of product collaboration and synergy between parent and subsidiary.

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About the Author

Catherine grew up in Southern California wearing a lot of black and trying to perfect the art of sarcasm. Prior to joining The Fool as a contract writer, Catherine was climbing the corporate ladder in marketing roles and dabbling in too many side hustles. When she's not writing, she can be found riding a horse in the country or shopping online for clothes.

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Bank of America is an advertising partner of Motley Fool Money. Catherine Brock has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Walt Disney. The Motley Fool has a disclosure policy.