The fiscal year that ended on October 3 brought not so good news for Walt Disney Co. Disney is losing cable channel subscribers. The company revealed they have reached 92 million subscribers to ESPN after losing three million of them in one year. The channel also had 92 million subscribers almost ten years ago, in 2006. Therefore, Disney is experiencing a major setback.
What’s happening
Disney estimated that its cable business will have an income growth of “high single digit” between 2013 and 2016. However, that was not the case and although the company did have a rise in profit of 7.3% in its fiscal fourth quarter, they disappointed on revenue.
Nonetheless, it seems that Disney is not the only company experiencing this problem. Time Warner Inc. also revealed at the beginning of the month they are having a decrease in the numbers of subscribers. Although subscription growth for ESPN hasn’t been rising steady since 2011, Disney is paying around $2 billion for NFL football games each year. The company will also be paying $1.4 billion starting 2016 to the NBA.
Given the loss of 3 million subscribers who were each paying an average of $6, Disney’s loss is estimated at $18 million in only one year. Financial analysts believe Disney is paying too much for such big loses.
Disney business still up and running
However, Walt Disney Co. still has its shares up 26%. Investors are more interested in Disney’s movies than in its channels. And Disney is keeping them interested by releasing the new Star Wars episode “The Force Awakens”.
The movie is expected to make $200 in the opening weekend. However, given that no other movie has ever earned more than $100 million in this period, this is less likely to happen. Hopefully they could have more success with “The Good Dinosaur”, an animation that hits theaters on Thanksgiving.
All in all, given the major setback Walt Disney Co. is experiencing with its cable sport channel and the fact that they are probably overpaying ESPN for NFL and NBA games maybe they should be focusing more on their movie business. After all, this is the business they have always been successful in and are more likely to keep up with the good work and good movies.
Image source: www.bing.com
