It's no secret that Walt Disney (DIS) has been under pressure, as concerns about cord-cutting have weighed on ESPN, its cash cow. What the company has to say about fourth-quarter earnings, though, could alleviate some investor fears that the situation isn't getting drastically worse.
Last week, ratings company Nielsen said that ESPN, the worldwide leader in sports television, lost 621,000 subscribers in October (Nielsen later retracted the figure), but the media and investors picked up on the fact that subscriber losses may be accelerating, an area of major concern to investors.
"A defensive release from ESPN countering regular monthly data from Nielsen has unnecessarily caused concerns among investors in Nielsen and served to highlight the ongoing decline in ESPN's subscriber base, which we anticipate will continue to be evident in the numbers when revised figures are eventually published," Pivotal Research analyst Brian Wieser wrote in a note following the release. "Overall, we do not expect any meaningful difference in ESPN's recent subscriber trajectory to follow from that update, and expect that we will continue to view Nielsen's estimates as the best available third party figures."
As more consumers get rid of their expensive cable bills -- or in some cases, never have one in the first place -- ESPN is being hurt more than other cable networks, due to its high reliance on subscriber fees and other areas of entertainment, like Netflix (NFLX) .
Investors have wondered when and if ESPN, which derives nearly two-thirds of its annual revenue from subscribers, could go direct to consumer, similar to what HBO has done with its HBO Now streaming service, but so far, ESPN has made little headway into the arena, despite comments from Disney CEO Bob Iger that it's not enough to have great content if you don't have a relationship with consumers.