Tuesday, August 27, 2013

Disney's ESPN is fighting to stay on top...DIS stock already showing signs of cracking.

As great as the Magic Kingdom and Pixar and Star Wars are, let's face it:  DIS stock is an ESPN story.

It has ridden the coattails of the $Billions in cable bundles ESPN generates on this awesome move from $16 to $67.

ESPN accounts for 43% of Disney's operating revenue.  Yes, 43%.

The NY Times wrote about the threat to ESPN's dominance this morning.  Here's an excerpt:

Beyond established cable rivals like NBCSN and CBS Sports Network, ESPN has a new and bold competitor in Fox Sports 1, which has a strong portfolio of rights. Mr. Skipper has made several early moves to strike back at Fox, hiring the political and sports statistician Nate Silver from The New York Times and bringing back Keith Olbermann to host a nightly show on ESPN2.
Meanwhile, companies like Google, Sony and Intel are planning virtual cable services that would be delivered on the Internet. They could lure consumers from traditional pay television as low-cost alternatives to traditional pay TV while also competing for major sports properties when ESPN’s contracts eventually expire. Mr. Skipper said he would make deals with these upstarts, but only on ESPN’s terms: they must take all of ESPN’s offerings, not just the ones they want.
With the rise of new competition come questions about the fate of existing customers.
Consumers are fleeing pay TV at a quickening pace: 898,000 in the past year, nearly twice the number in the previous year, the analyst Craig Moffett said. And in the past two years, ESPN has lost more than one million subscribers.
What’s more, ESPN ratings plunged 32 percent in the quarter that ended in June.
Click here for the full article:  NY Times

Disney has been priced to perfection and it is not a perfect story anymore.

No comments:

Post a Comment