Separately, Disney confirmed on Tuesday that it had acquired a 33% interest in BAMTech, a video-streaming company created by Major League Baseball. “The pattern over the last few quarters has been that the company has outperformed for studio entertainment results, and underperformed media networks”, said Nomura analyst Anthony DiClemente.
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Disney’s Media Networks, which includes all-day sports programming channel ESPN, has been the focus of investors over the past year or so due to increased competition from Netflix (NFLX), Hulu, and Amazon’s (AMZN) Prime Video. The new service will show professional baseball and hockey as well as college football and basketball. “We are looking at a marketplace that is so dynamic”.
We’ve been hearing for awhile that Disney is readying an ESPN a la carte offering that doesn’t require a cable subscription. Tuesday reported an increase in profit for the third quarter, driven largely by strong performance of studio and cable business. The same period from past year had $1.45 in EPS on $13.1 billion in revenue. That topped the $1.61 a share average of analysts’ estimates compiled by Bloomberg.
Overall revenues were up 9 percent to $14.3 billion.
The purchase of the minority stake will result in a “very slight dilution” in earnings for Disney, the CEO said.
The $1 billion payment will be made in two installments, one now and one in January. Viewership via satellite and cable services is declining as streaming options proliferate, and ESPN, the naysayers contend, is particularly exposed to a slowdown because Disney has locked itself into long-term payments for sports rights.
ESPN president John Skipper said the new service would be an “outstanding complement” to WatchESPN, the network’s existing online and mobile streaming service.
That was slightly below the US$4.31 billion consensus forecast of analysts, according to FactSet. The same month a child died in an alligator attack at Disney’s Orlando, Fla., resort. Over the previous year, investors have been concerned about the lack of subscriber growth at ESPN, the crown jewel of Disney’s media networks unit.
The Walt Disney Company incorporated on July 28 1995 together with its subsidiaries and affiliates is a diversified worldwide family entertainment and media enterprise with five business segments: media networks parks and resorts studio entertainment consumer products and interactive media.
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Since Shanghai Disney opened at the very tail end of the quarter – the quarter ended July 2 and the park opened on June 16 – much of its financial impact has yet to be realized. The company now controls one-third of the entire US box office industry, therefore doubling its market share over the last two years behind ongoing success with Marvel, Lucasfilm and Pixar.
