Walt Disney Co (NYSE:DIS) ESPN, amongst various another thing such as ABC, may be coming to an end, due to both weighing down on the long term growth of the entertainment giant. Although the entertainment giant has made considerable progress in terms of film, the same cannot be said for its presence on televisions.
Disney has admitted to having a rough year, despite their key acquisitions of various film organizations. Those acquired include Pixar, Marvel, as well as LucasFilm. However, filming is not where the problem lies. Rather in the consistent falling ratings of ABC and subscriber losses of ESPN.
These ratings and subscriber losses, call to question how much longer Disney ESPN, and ABC will continue to function as subsidiaries for the entertainment giant. A prime example of the struggles that Disney is facing, is their attempts to convert ABC to ABC Family, which has not gone as well as was hoped.
The reason Disney ESPN and ABC may fail
One of Disney’s main problems to the loss of subscribers to ESPN is the fact that as with all entertainment media, cable is a large portion of the triple bottom line for the business. In fact, ESPN makes up approximately 30 percent of all operating income, for Disney.
This makes it almost a vital organ for Disney to continue functioning and excelling. However, reports indicate that the entertainment giant has lost almost 10 million subscribers in the last five years alone.
One of the biggest problems that ESPN currently faces, is its own success. Previously, ESPN was one of the largest sports channels available, and due to this, it is not priced cheaply. In fact, subscriptions can cost as high as $7. Furthermore, Disney has consistently requested MVPD’s to pay more, due to the status of ESPN.
This plan has backfired on the entertainment giant, however, as with the increased rates, more and more MVPD’s are deciding to omit ESPN completely.
Comments from people with the know-how of Disney
Michael Nathanson, a senior analyst with Moffett Nathanson Research stated, “Disney’s focus has been on buying assets with recurring revenue streams that deliver franchises that can be moved through different parts of the company. This is the reason that ABC does not work.” The same could be said for Disney ESPN currently.
Disney stock were at $97.71 on Monday, after seeing an improvement by $0.08 or 0.08%
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