What Disney results tell us about the future of live sports
The group's profits are up - but its shares are falling...12:56 Wednesday 10 May 2017, 12:56 10 May 2017
Walt Disney profits rose by 11% to $2.4bn during the first three months of this year.
Its performance was boosted by box office hits like Beauty and the Beast - and a surprise jump in visitor numbers at its theme parks.
However, the company is being weighed down by concerns over the future of its sports network, ESPN.
Its cable offerings have been haemorrhaging subscribers for some time, as viewers and users are 'cutting the cord' and ditching costly TV bundles, favouring digital alternatives.
The group's latest filing shows that the station's subscribers are down again - and its operating costs are on the rise as a new colossal NBA deal has come into effect. That deal is reported to be worth $2.66bn per season.
ESPN announced a series of high-profile job cuts last month which will reduce its headcount by 100.
At the time, its president John Skipper said that said that changes to its operations needed to "go further, faster" making it a more "efficient and nimble" business as viewing habits change.
The company is currently developing an ESPN subscription streaming platform and has offered 'slim' less-costly cable bundles for sports fans.
Its poor performance led to an overall fall in its TV department's operating income. It was down by 3% but still amounted to $2.2bn.
This was one of the main contributing factors to a slight drop in Disney's share price following the publication of these results.
The live sports business
As media has gone digital many trends have bubbled in the US before moving across the Atlantic.
It will be interesting to watch whether this toxic mix of falling audience and subscriber numbers and rising bills for the rights to air live sports causes similar problems for European broadcasters.
Sky Sports and BT have gone all-in on a £5.14bn deal to show Premier League football between 2016 and 2019. The audiences watching live Premier League games are down by almost 20% according to some counts - while BT's Champions League offering is also struggling.
The company's performance was boosted by box office hits like Beauty and the Beast - which claimed the title of the highest grossing PG film in the US.
It came hot on the heels of Rogue One: A Star Wars Story which was a huge hit for the studio during the final weeks of 2017. Both films grossed more than $1bn at box offices around the globe.
There was also a surprise jump in visitor numbers at Disney's theme parks.
"Attendance is outpacing our most optimistic projections," Disney CEO Robert Iger said commenting on the success of its parks.
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