Piper Jaffray analyst Stan Meyers expects Disney's (DIS) announcement of a new over-the-top service for ESPN will weigh on the shares as investors digest the long-term implications. In the near-term, the service will likely be more of a leverage tool as Disney gears up for the next cycle of affiliate fees negotiations, Meyers tells investors in a post-earnings research note.
Longer-term, Disney will likely embrace the new digital platform as it seeks to monetize the fragmented consumer, the analyst contends. Meyers continues to expect Disney's intellectual property to drive "significant value" over the next five years despite the decelerating pace of growth at ESPN.
The analyst keeps an Overweight rating on Disney shares with a $120 price target. Following last night's Q3 results, Disney share are down 1%, or $1.27, to $95.40 in pre-market trading.
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