Disney fears ESPN decline


On Wall Street, there's skittishness about the Happiest Place on Earth.

Disney shares fell nearly 9% when the market opened on Wednesday morning amid deep concerns about the company's most profitable enterprise, ESPN.

Before the drop, Disney had been the best performer in the Dow this year. And the stock is still up 20% in 2015.

But when the company posted mixed second quarter results on Tuesday, the focus was on ESPN, which is being pinched by changes in consumer habits.

Disney CEO Bob Iger confirmed that there have been "some subscriber losses" at ESPN because some households have opted for smaller cable packages that don't include the pricey cable channel.

But he said that Nielsen's estimate of the decline -- 3.2 million subscribers in a little more than 12 months -- was overstated. The flagship channel has more than 90 million subscribers overall.

On a conference call with investors on Tuesday, Iger forcefully expressed confidence in ESPN's future, and he reiterated that view in interviews on Wednesday morning.

On CNBC, he said "we are very bullish" about the cable business.

But investors appear spooked about the possible impact from "cord-cutting" (a term for households dropping cable TV altogether) and "cord-shaving" (households choosing smaller bundles of cable).

ESPN continues to make huge amounts of money through its $6-a-month subscriber fee, but Disney said Tuesday that its year-over-year profits won't be quite as high as it had forecast earlier.

The expectation was for high-single-digit operating profit growth from Disney's cable channels (led by ESPN) and now the forecast is for mid-single-digit growth.

At 10:30 a.m. Wednesday, Disney (DIS) shares were down about 7%. Analysts at Jefferies and BMO Capital downgraded Disney stock.






Ask us about our FREE financial advice program: ChatButton


Other Top Stories:

Will Twitter's Share Crash?

Technical Analysis Lesson 1 - Introduction

How I Made Over $30,000 a Year by Investing in Binary Options


Follow us and SHARE this story on Facebook:   




Please publish modules in offcanvas position.