Posted 07 February 2013 - 11:51 AM
Disney's sports costs up, earnings down. Paying a lot more for sports fees. Ulitimately that means they will try to push those on the distributors. Article below
Disney yesterday posted lower earnings “due in part to the rising costs of acquiring TV sports rights for its ESPN division,” according to Grover & Zeidler of REUTERS. Net income “fell 6 percent" to $1.38B from $1.46B, and net income per share “fell 4 percent to 77 cents a share from 80 cents a share for the company's fiscal first quarter.” Revenues “rose 5 percent to $11.3 billion" from $10.78B a year earlier. Reuters analysis showed that Wall Street was “expecting revenues" of $11.2B. Disney said that operating income at its cable networks decreased $15M to $952M for the quarter "due to a decrease at ESPN, partially offset by growth at its Disney Channel, ABC Family and A&E Television Networks” (REUTERS, 2/5). In N.Y., Brooks Barnes reported ESPN had a “significant impact on Disney’s quarter, with programming expenses increasing for football and basketball.” Those costs “held back results for Disney’s media networks unit, which houses the cable sports behemoth; operating income there increased a tepid 2 percent" to $1.21B (NYTIMES.com, 2/5). CABLEFAX DAILY reports ESPN’s rising programming costs “reflected rate increases for college football and the NFL, as well as an increase in the number of NBA games due to the lockout in the prior year” (CABLEFAX DAILY, 2/6). In L.A., Dawn Chmielewski reported Disney’s results “also included a $219-million gain from the sale of its 50% interest in ESPN Star sports in India to its joint venture partner, News Corp.” (LATIMES.com, 2/5).
HEADING HIGHER: Disney Chair & CEO Bob Iger said the "price increases that we have for ESPN are primarily increases that we believe reflect the continued value proposition for ESPN, for the distributor and for the advertiser … and we’ll be able to continue to raise ESPN’s rates." Iger: "We don’t do so in any cavalier fashion. We’ve been investing in its programming and in the production and believe that value proposition is still there strongly.” He noted programming costs were high this quarter because of the "increase in rights fees" for college football. Iger: “But if you look at the year, the costs for ESPN’s programming will start to flatten out. We also have some distribution deals whose increases don’t kick in until after the first quarter” (“Closing Bell with Maria Bartiromo,” CNBC, 2/5). SNL Kagan data shows that ESPN currently “charges distributors $5 per household per month -- the most of any network.” But Iger “defended higher rates for ESPN, saying customers are getting more for their money through add-ons such as the WatchESPN mobile app” (N.Y. POST, 2/6).
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