Disney is poised for an earnings lift from 'Star Wars' amid angst over ESPN
Walt Disney Co.'s
"Star Wars: The Force Awakens" is expected to cross the $2-billion mark
at the box office this week, becoming just the third film to reach that
lofty plateau.
The blockbuster space opera is the opening act in a multiyear push by Disney to infuse its various businesses with the "Star Wars" brand, generating billions of dollars in revenue for the Burbank entertainment giant.
Investors and analysts have cheered the plans, but that hasn't yet translated to gains on Wall Street. Amid a wider market downturn, Disney's stock has declined 19% in the last three months, the steepest drop among rivals Time Warner Inc., 21st Century Fox Inc., Comcast Corp. and Viacom Inc.
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Shares of Disney have been in a slump since August, when concerns over the strength of its television business in the face of cord-cutting and questions about the high cost of sports rights led to a sell-off of many publicly traded media and entertainment firms.
This subject is likely to surface again Tuesday when Disney reports fiscal first-quarter earnings. Though "Star Wars" merchandise and movie ticket sales are expected to provide a big boost to the company, challenges in the TV business remain a lingering concern among many analysts and investors. Nielsen Co. said last summer that ESPN had lost about 3 million subscribers over the prior year.
"We are concerned about the ESPN situation, television itself, the whole television industry," said Janna Sampson, co-chief investment officer of OakBrook Investments, which owns about $25 million of Disney stock. "Are there continuing subscriber losses [at ESPN]? Any new issues? … I think people will be focused on that."
The subscriber losses mean that Disney will collect less money from pay-TV operators for the right to carry its content. Those cable programming fees generate huge profits for Disney and other media companies with cable TV channels.
ESPN long has been a cash cow for Disney and the biggest contributor to the company's lucrative cable group, which produced $16.6 billion in revenue and operating income of $6.8 billion for fiscal 2015.
The blockbuster space opera is the opening act in a multiyear push by Disney to infuse its various businesses with the "Star Wars" brand, generating billions of dollars in revenue for the Burbank entertainment giant.
Investors and analysts have cheered the plans, but that hasn't yet translated to gains on Wall Street. Amid a wider market downturn, Disney's stock has declined 19% in the last three months, the steepest drop among rivals Time Warner Inc., 21st Century Fox Inc., Comcast Corp. and Viacom Inc.
See more of Entertainment’s top stories on Facebook >>
Shares of Disney have been in a slump since August, when concerns over the strength of its television business in the face of cord-cutting and questions about the high cost of sports rights led to a sell-off of many publicly traded media and entertainment firms.
This subject is likely to surface again Tuesday when Disney reports fiscal first-quarter earnings. Though "Star Wars" merchandise and movie ticket sales are expected to provide a big boost to the company, challenges in the TV business remain a lingering concern among many analysts and investors. Nielsen Co. said last summer that ESPN had lost about 3 million subscribers over the prior year.
"We are concerned about the ESPN situation, television itself, the whole television industry," said Janna Sampson, co-chief investment officer of OakBrook Investments, which owns about $25 million of Disney stock. "Are there continuing subscriber losses [at ESPN]? Any new issues? … I think people will be focused on that."
The subscriber losses mean that Disney will collect less money from pay-TV operators for the right to carry its content. Those cable programming fees generate huge profits for Disney and other media companies with cable TV channels.
ESPN long has been a cash cow for Disney and the biggest contributor to the company's lucrative cable group, which produced $16.6 billion in revenue and operating income of $6.8 billion for fiscal 2015.
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