Web Failure Is What Keeps Disney Down

This column was originally published on RealMoney on Nov. 13 at 11:53 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Did Disney(DIS Quote) really have that bad a quarter? This company's been pummeled after its quarter. It makes little sense to me on 13% growth and 18 times earnings. That's pretty chary.

One theory is that there's no more upside, that prime-time television costs too much -- even though Disney is winning that battle -- and you can't ever make as much money as you used to in prime time. That's the NBC theory. NBC announced that it's cutting the hours of prime time because the costs can't be justified. The winner of the prime-time wars these days makes about half of what it used to a half decade ago, or so the theory goes.

I like this theory, but the problem with it is that Disney has a fabulous and envious protection plan in movies, which can blunt any slowdown from TV. These guys are really good at movies, and the animated movies are cheaper to produce than TV shows and have a great record.

Another theory is that Disney can't get much more out of the theme parks. This one I'm not buying because I believe that there's plenty of room for theme parks to expand. And Disney is expanding them.

A third theory holds that Disney has had to spend too much to maintain share in ESPN. I find the spending to be a short-term issue. ESPN is still the least TiVo'd game in the room, meaning its viewers actually watch all those ads instead of blitzing past them.

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