disney earnings, profits hit records



I wanted to post this in the original thread on the ESPN layoffs, but it was closed. However just goes to show... ESPN layoffs are not about the sky falling.

Sorry I couldn't format this better on my phone.

And the new Star Wars movie hasn't even hit the screen yet.....

Stock is down because the revenue #'s didn't meet the estimate.

Keep in mind though ESPN is a subsidiary with Disney owning 80% and Hearst Corp owning 20%. They can't move money around like people are probably thinking they can to support ESPN.

(11-05-2015 05:15 PM)MWC Tex Wrote:  Stock is down because the revenue #'s didn't meet the estimate.

Keep in mind though ESPN is a subsidiary with Disney owning 80% and Hearst Corp owning 20%. They can't move money around like people are probably thinking they can to support ESPN.

You've got it backwards. ESPN has been supporting the entire Disney company for the past decade. It's not a matter of the rest of Disney not being able to support ESPN. Instead, it's about how Disney has been so dependent on ESPN for so long (even with so many successful movies and theme parks) that the company's stock would go down with any hint of ESPN weakness even with Star Wars breaking records all over the place for advance ticket sales.

To put it in perspective, ESPN generates as much in subscriber fees EVERY MONTH as the domestic gross for any Star Wars, Avengers or Frozen movie. We're not even talking about ESPN's ad revenue (also the highest in the industry because of the premium for sports) on top of that. A couple of years ago, ESPN generated as much profit by itself as the rest of the Disney Company *combined*. Any threat to ESPN's model will dominate the worries of investors even if the rest of the company is doing well.

Looks like the ESPN cost-cutting was done to make a statement to the market, to show investors that even if revenue goes down as a result of cord cutting, ESPN is lean enough (relatively speaking) to remain extremely profitable. They made a show of cutting Simmons and Grantland and Olbermann and the $40 million/year Manhattan studio so they can say they are focusing their expenses on the profit-generating aspects of the company.

(11-05-2015 05:54 PM)Wedge Wrote:  Looks like the ESPN cost-cutting was done to make a statement to the market, to show investors that even if revenue goes down as a result of cord cutting, ESPN is lean enough (relatively speaking) to remain extremely profitable. They made a show of cutting Simmons and Grantland and Olbermann and the $40 million/year Manhattan studio so they can say they are focusing their expenses on the profit-generating aspects of the company.

Their ratings for shows on ABC have not been very good. Even they can't keep a long running series on Disney Channel on for a long run. The last long running show was Hannah Montana. ABC Family is having issues.
They ruined Star Wars franchise big time.
They wanted to reboot Indiana Jones, but got a backlash.

From what I can tell of the new Star Wars? It is ruined even before it came out.

(11-05-2015 05:54 PM)Wedge Wrote:  Looks like the ESPN cost-cutting was done to make a statement to the market, to show investors that even if revenue goes down as a result of cord cutting, ESPN is lean enough (relatively speaking) to remain extremely profitable. They made a show of cutting Simmons and Grantland and Olbermann and the $40 million/year Manhattan studio so they can say they are focusing their expenses on the profit-generating aspects of the company.

That was more or less the point I made in the other thread, and how Disney was doing what corporations sometimes do, and make the cash cow pay for the "sins" of the underperforming units. Thus I thought it should be brought back up. Frank reiterated the point I was trying to make better than I did.

Ben Fritz @benfritz ESPN grows total subscribers due to full quarter of new SEC network, but had declines "at certain other of our networks."

Greg Flugaur added,

Greg Flugaur ‏@flugempire · 1h1 hour ago

Greg Flugaur Retweeted Ben Fritz
https://mobile.twitter.com/benfritz/stat...0838557700 …

Huuuummmm.....let me guess.....LHN?

"The reports of my death have been greatly exaggerated."

On Thursday, the Walt Disney Company issued its quarterly earnings release. https://cdn.thewaltdisneycompany.com/sit...rnings.pdf Disney's Cable Networks segment, which is largely driven by ESPN, saw revenues increase for the quarter by 12% compared to last year ($4.245 Billion vs. $3.776 billion) and operating income increase by 30% ($1.655 billion vs. $1.274 billion). For 12 months, revenues were up 10% and operating income by 5%.

The earnings release described the causes of the quarterly improvement at ESPN as follows:

The increase at ESPN reflected higher affiliate and advertising revenues, partially offset by an increase in programming costs. Affiliate revenue growth was driven by contractual rate increases and an increase in subscribers. The increase in subscribers was due to a full quarter of the SEC Network, which launched in August 2014, partially offset by a decline in subscribers at certain of our networks. Growth in advertising revenue reflected higher units sold, partially offset by lower ratings. Higher programming costs reflected a full quarter for the SEC Network, additional rights for the US Open Tennis tournament and contractual rate increases for Major League Baseball and NFL rights, partially offset by the absence of rights costs for NASCAR.

On the earnings call, Disney CEO Robert Iger addressed the cable subscriber issue directly. From http://www.nasdaq.com/article/disney-pus...z3qigRbwUi :

Amid Wall Street concerns that declining numbers of cable subscribers bode ill for big media companies, Robert Iger is heavily touting the digital future.

Cable companies that offer "large bundles" are "being challenged by these new entrants," said Mr. Iger. "We're seizing the opportunity to distribute our content with these new entrants because we think they deliver better user experiences [and] the price-to-value experience also tends to be attractive to young people."

On Thursday, Disney signed a deal to include some of its channels on Sony Corp.'s PlayStation Vue service, a so-called "skinny bundle" offered through the company's videogame console.

"They came to us to negotiate a deal because clearly the product they launched was not penetrating the marketplace as much as they expected and they needed ESPN and ABC," said Mr. Iger.

Mr. Iger also said of such less-expensive television offerings: "The more the merrier . . . clearly these platforms cannot launch successfully without our array of channels."

Not so sure about that last sentence. My wife and I would still have Sling without ESPN in the base package because they offer a lot of other channels the she watches for a nominal cost. Without ESPN, I'm sure the cost would drop to $15/month from the $20/month or add other channels to keep that price point.

So much for the haters and their "The SEC Network is destroying ESPN" argument

Investors seem to like the news. DIS is over $116/share, up 3% for the day, as of 11 a.m.

can't ESPN void the LHN contract anytime it wants? i would think espn would love to send texas to the pac 12 for a chunk of the pac 12 network. With the SEC and ACC on epsn lockdown, getting texas into the pac 12 for part of the network would seem to be $. ESPN could just give fox the big 10 if all that went down.

The B1GN and Pac12N depend on ESPN bundle in cable. If ESPN separates itself, perhaps not so good for B1GN and Pac12N. Tiers are relevant with conference networks and cable bundles.

(11-06-2015 09:15 AM)orangefan Wrote:  "The reports of my death have been greatly exaggerated."

On Thursday, the Walt Disney Company issued its quarterly earnings release. https://cdn.thewaltdisneycompany.com/sit...rnings.pdf Disney's Cable Networks segment, which is largely driven by ESPN, saw revenues increase for the quarter by 12% compared to last year ($4.245 Billion vs. $3.776 billion) and operating income increase by 30% ($1.655 billion vs. $1.274 billion). For 12 months, revenues were up 10% and operating income by 5%.

The earnings release described the causes of the quarterly improvement at ESPN as follows:

The increase at ESPN reflected higher affiliate and advertising revenues, partially offset by an increase in programming costs. Affiliate revenue growth was driven by contractual rate increases and an increase in subscribers. The increase in subscribers was due to a full quarter of the SEC Network, which launched in August 2014, partially offset by a decline in subscribers at certain of our networks. Growth in advertising revenue reflected higher units sold, partially offset by lower ratings. Higher programming costs reflected a full quarter for the SEC Network, additional rights for the US Open Tennis tournament and contractual rate increases for Major League Baseball and NFL rights, partially offset by the absence of rights costs for NASCAR.

On the earnings call, Disney CEO Robert Iger addressed the cable subscriber issue directly. From http://www.nasdaq.com/article/disney-pus...z3qigRbwUi :

Amid Wall Street concerns that declining numbers of cable subscribers bode ill for big media companies, Robert Iger is heavily touting the digital future.

Cable companies that offer "large bundles" are "being challenged by these new entrants," said Mr. Iger. "We're seizing the opportunity to distribute our content with these new entrants because we think they deliver better user experiences [and] the price-to-value experience also tends to be attractive to young people."

On Thursday, Disney signed a deal to include some of its channels on Sony Corp.'s PlayStation Vue service, a so-called "skinny bundle" offered through the company's videogame console.

"They came to us to negotiate a deal because clearly the product they launched was not penetrating the marketplace as much as they expected and they needed ESPN and ABC," said Mr. Iger.

Mr. Iger also said of such less-expensive television offerings: "The more the merrier . . . clearly these platforms cannot launch successfully without our array of channels."

Consumers (young and old; cord-maintainers, cord-cutters and cord-nevers alike) don't give a ____ about bundle-size.

They care about one thing: price!


Cord-cutting is driven by nothing more than being fed up with the cable bill. No one would complain or give a ____ if the bundle stayed at 150 channels, but if the price dropped 50%.



So, Mr. Iger might be making the right call, but he doesn't know what he's talking about.


And eventually, market forces will dictate bundle-size and price upwards on the new platforms as capitalism ever forces profit growth above all else.

TWDC had $48 billion in revenue for 2014 (wikipedia).

ESPN had $10 billion annual revenue, per this 2012 article: http://www.forbes.com/sites/kurtbadenhau...0-billion/


I'd hardly say that TWDC is absolutely reliant on ESPN.

(11-06-2015 11:40 AM)Dasville Wrote:  The B1GN and Pac12N depend on ESPN bundle in cable. If ESPN separates itself, perhaps not so good for B1GN and Pac12N. Tiers are relevant with conference networks and cable bundles.

Why would either be dependent on ESPN bundling? ESPN has zero ownership in either network.

(11-05-2015 06:05 PM)MWC Tex Wrote:  Greg Flugaur added,

Greg Flugaur ‏@flugempire · 1h1 hour ago

Greg Flugaur Retweeted Ben Fritz
https://mobile.twitter.com/benfritz/stat...0838557700 …

Huuuummmm.....let me guess.....LHN?

This guy isn't very credible.

(11-06-2015 01:58 PM)CardinalJim Wrote:  

(11-05-2015 06:05 PM)MWC Tex Wrote:  Greg Flugaur added,

Greg Flugaur ‏@flugempire · 1h1 hour ago

Greg Flugaur Retweeted Ben Fritz
https://mobile.twitter.com/benfritz/stat...0838557700 …

Huuuummmm.....let me guess.....LHN?

This guy isn't very credible.

He may not be...but the point is if the other network losing money is the LHN. I would tend to believe that, since it is only a specific channel geared to 1 school.