E Disney’s ESPN Continues To Struggle With Lost Subscribers

Walt Disney Co. (DIS) may have a blockbuster hit on its hands with the live remake of “Beauty and the Beast” and “Guardians of the Galaxy Vol. 2” but when it  comes to its EPSN network it continues to struggle.

That was the major takeaway from Disney’s fiscal second quarter earnings results which it offered up to Wall Street after the close of trading Tuesday. While Disney was able to post a profit for the last quarter of $1.50 a share, surpassing the analyst consensus for earnings of $1.41 a share, revenue in its cable division which includes ESPN came in at $4.1 billion, lower than the $4.2 billion analysts were looking for, according to Bloomberg. Profit in the unit dipped 3 percent in the fiscal second quarter. Disney said ESPN continued to lose subscribers during the quarter while at the same time it had to pay higher programming costs which weighed on results. Revenue for the fiscal second quarter was $13.3 billion, slightly lower than what Wall Street was looking for.

For some time now investors and Wall Street analysts have been seemingly obsessed with Disney’s ESPN and the struggles the sports network has faced over the years. Since 2014 speculation has abounded about Disney selling ESPN, taking it public or doing nothing at all. More recently Disney has been engaging in cost cutting at ESPN including laying off a slew of journalists and on air talent in April. The layoffs included high profile talent at the sports network such as former N.F.L. players Trent Dilfer and Danny Kanell, the former N.B.A. player Len Elmore, the former baseball general manager Jim Bowden and the longtime N.F.L. reporter Ed Werder, reported the New York Times at the time. While ESPN is still the leader in sports media, it has been hurt over the past few years from a decline in viewership as new ways to consume live sports are popping up all over the Internet. According to the New York Times ESPN has lost more than 10 million subscribers over the course of the past few years. At the same time that it is seeing a decline in subscribers, the cost to broadcast sporting events is getting pricier for ESPN. For instance ESPN signed an eight year extension deal with the NFL in 2011 that costs it $15.2 billion. It also paying $12 billion for a deal with the NBA and $7.3 billion to air the college football playoffs.

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Mike Nolan 2 years ago Member's comment

I never understood the value proposition of #Disney buying #ESPN in the first place. Can someone explain to me why this made sense in the first place? Where are the synergies? $DIS

Michele Kalker 2 years ago Member's comment

Good question. The value of buying #StarWars made much more sense as it's in #Disney's wheelhouse with movie production, licensing, toys, etc. And that purchase has paid off in spades. But #ESPN? I don't see the value. I think they should spin it off.