The Walt Disney Company's (DIS) flagship sports network ESPN might be suffering from weak subscriber totals, but it remains a strong asset with tons of value that can be unlocked if Disney decides either to sell it or spin it off as a separate entity.

This is the premise of Steven Cahall, analyst at RBC Capital, who believes that if Disney wants to eliminate the overhang that is pressuring its shares, it should separate itself from ESPN, a move that would also give Disney more M&A options or even make it an attractive acquisition candidate. (See also: Disney Stock Falls on Amazon's Live Sports Plan.)

Shares of Disney closed on Monday at $99.96, down 5% year-to-date and down 12.5% over the last 12 months, largely due to headwinds from ESPN. Cahall, who has a Sector Perform rating and a $101 price target on Disney stock, sees a scenario in which a potential buyer could take an 80% stake in ESPN for $22 billion, valuing the asset at $2 per share, fully taxed. He thinks a strategic buyer might be willing to pay a higher premium.

Cahall's options for ESPN differ from comments made last week by Anthony DiClemente, analyst at Instinet media, who has a Buy rating and a $110 price target on Disney shares. DiClemente addressed the issues regarding ESPN metrics as reported by Nielsen, saying the number doesn't include the new, "skinny" digital video bundles from Dish Network Corporation's (DISH) Sling TV or Sony Corporation's (SNE) PlayStation Vue. (See also: ESPN Struggles Not the End of Disney: Analysts.)

Disney CEO Bob Iger said last month that the ESPN decline had bottomed and that he expects subscribers to return as more people become increasingly familiar with skinnier bundles that cost less. It would seem that Iger is in no rush to sell ESPN and will work to grow subscribers with the help of new TV platforms that rely more on the internet and less on traditional sources likes cable and satellite. (See also: Disney CEO Bob Iger Assures Growth at ESPN.)

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