
Disney Earnings Live Blog -- Mr. Iger, What's the Outlook for ESPN?
It's a critical time for media companies, and none more so than Disney (DIS) - Get Report , the world's largest entertainment company.
Disney, owner of the Star Wars franchise, the ABC network and ESPN, will report earnings on Thursday for the calendar third quarter shortly after the close of trading in New York. CEO Robert Iger will host a conference call beginning at 5 P.M. on the East Coast.
The conference call promises to be a high theater for media stocks.
This is a particularly critical conference call for Iger whose seemingly innocuous comment to investors on Aug. 4 that ESPN was experiencing a "modest" decline in ESPN subscribers sparked a massive sell-off of media shares. Disney tumbled 6% the following day and all others -- Time Warner (TWX) , 21st Century Fox (FOXA) - Get Report , Viacom (VIAB) - Get Report , CBS (CBS) - Get Report , etc. -- followed in tandem.
More than ever, Iger's words will be parsed for hints about what he's seeing at the company's U.S. cable-TV networks, of which ESPN is by far the largest.
This has been a turbulent three months for Disney and ESPN, its sports powerhouse and the engine behind much of the company's profits. Ratings have slipped ever so slightly, along with subscribers. Some 300 ESPN employees were laid off this fall, and just last week, the folks in corporate shut down the popular Web site Grantland.
Media stocks had been on a rebound since late-September, but Time Warner (TWX) dropped a bomb on Wednesday, cutting its 2016 profit forecast to $5.25 a share from an average projection of $5.60, according to a Bloomberg Business survey of Wall Street analysts. Along with lowering its forecast, Time Warner also acknowledged a drop in subscribers to its cable-TV networks.
Declining subscribers is big trouble for content companies. Fewer subscribers means that pay-TV operators -- Comcast, Charter -- can pay a Disney or Time Warner less in so-called carriage fees to broadcast a network such as ESPN. Carriage or affiliate fees are the largest source of revenue for a cable-TV operator. A slip in carriage fees is cause for great concern given that television advertising sales, the other major revenue bucket, is also getting smaller.
Iger will be on the hot seat this afternoon to ease investor concern about the outlook for ESPN subscribers, and by extension, for the future of the traditional pay-TV bundle.
TheStreet will be live blogging the earnings starting at 3:45 P.M.








