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Nov. 24, 2015, 7:28 PM
- Disney (DIS -1.2%) kicked off a great media debate this summer by pointing to (and then deflecting criticism about) declining subscriber numbers at ESPN, its flagship sports network.
- Since then, some analysts have joined in with CEO Bob Iger in suggesting that reactions were overdone. Hedge fund manager Eric Jackson disagrees, suggesting the numbers may have a bigger drop ahead.
- He points to SEC filings in suggesting that ESPN subscribers peaked at 99M in 2013, vs. a Nielsen estimate of 92M today -- which comes with a corresponding drop in affiliate fees for one of the richest channels in subscriber cost.
- With ESPN getting an estimated $6.60 per core subscriber each month, Jackson figures the network is getting $650M less in affiliate revenues and $250M less in advertising -- close to $1B less in just two years.
- Open questions: whether the decline in subscribers will remain steady or if it's already moderating, and what the effect will be if ESPN goes over-the-top (as the company is testing with DisneyLife in the UK).
- Previously: Disney call: Excited for 'Star Wars,' no panic over ESPN (Nov. 05 2015)
- Previously: Disney up 1% as it rolls out DisneyLife subscription service to UK (Oct. 21 2015)
- Previously: Disney down again, -5% amid broad media sell-off (Aug. 06 2015)
- Previously: Disney's Iger: ESPN could go direct to consumers one day (Jul. 27 2015)
Nov. 24, 2015, 1:49 PM
- A global travel warning issued by the U.S. Department is impacting several sectors. Hotel stocks are notably weaker, while amusement park stocks are also trailing broad market averages. Airlines are feeling a double whammy from travel demand concerns and a 3% rise in crude oil futures.
- In some cases the sell-off appears to be an overreaction with little evidence in that travel habits will change dramatically, according to some analysts.
- Decliners include Hyatt Hotels (H -1.5%), Hilton Worldwide (HLT -1.1%), Marriott International (MAR -1.8%), JetBlue (JBLU -1.7%), Delta Air Lines (DAL -3.3%), American Airlines Group (AAL -2.4%), United Continental (UAL -3.2%), Allegiant Travel (ALGT -5.3%), Spirit Airlines (SAVE -4.1%), Southwest Airlines (LUV -2.7%), Six Flags (SIX -1.0%), Cedar Fair (FUN -1.0%), Disney (DIS -0.9%), and Sabre (SABR -3.9%), Virgin Amerinca (VA -2.5%), Alaska Air Group (ALK -1.5%).
- Previously: PCLN, EXPE, TRIP sell off after State Department issues travel warning (Nov. 24)
Nov. 23, 2015, 1:49 PM
- AT&T (T -0.4%) has come to a new long-term, multiplatform distribution deal with A&E for its subscribers on U-verse TV and DirecTV.
- The deal includes linear TV, "TV Everywhere," video on demand and mobile viewing.
- Channels included in the deal by A&E -- a joint venture between Hearst and Walt Disney (DIS -0.6%) -- feature A&E as well as Lifetime, History, Lifetime Movies and the upcoming Viceland, among others.
Nov. 19, 2015, 7:53 PM
- Sports broadcasters have been enjoying an ad bonanza from the rapidly growing daily fantasy sports industry -- try to watch a game this year without uncountable ads from DraftKings and FanDuel -- but a crackdown on those two firms and their industry could run out the clock on the party, analysts say.
- The two companies combined spent $118M on TV ads in September, says Michael Nathanson -- that's AT&T-level ($129.2M) money. And most of it goes to ESPN (DIS +0.5%), followed closely by Fox Sports (FOX -1%, FOXA -1.2%).
- "While the category is not as large as autos, films, health care or consumer products, the birth of a new category was incremental to the [TV] market and had to be a factor in [Q3's] upside to ad estimates," Nathanson writes.
- NBCUniversal (CMCSA +0.1%) and CBS (CBS +0.9%) are also benefiting, to a lesser extent, from the fantasy spending.
- Bernstein's Todd Juenger said the spending gains may be "unsustainable," adding "Daily fantasy sports sites may not even exist next year. Even if they do, the probability that they grow, again, at these rates is very low."
Nov. 17, 2015, 6:02 PM
- If Hulu's three partner-owners (DIS, CMCSA, FOX/FOXA) decide to bring in a fourth -- Time Warner (NYSE:TWX), reported to be in very preliminary talks about an equal stake -- it could be the tipping point for a federal probe.
- That's the take of Guggenheim's Paul Gallant, if anything interesting were to happen with the foursome's licensing of content to Netflix.
- It's possible that media execs haven't private discussed restricting content sales, he writes -- "But given the growing public discussion around this issue — highlighted by Time Warner's comments and its possible Hulu move — it would not surprise us if the DOJ began an investigation for any indication of coordination regarding OTT."
- The feds reportedly launched an investigation before, he points out, into cable TV stances on over-the-top video services in 2012.
- On the other hand, there's far from a uniform stance toward Netflix from the content providers, and Hulu co-owner Disney has a three-year movie deal with the service starting next year.
- Comcast can't take an active role in management at Hulu until 2018, based on conditions from its acquisition of NBCUniversal.
- Previously: Hulu-Time Warner deal: A four-way strategic play, if it happens (Nov. 12 2015)
- Previously: WSJ: Hulu looking at stake sale to Time Warner valuing it at $5B-$6B (Nov. 12 2015)
Nov. 17, 2015, 5:19 PM
- The Hallmark Channel (CRWN +1.7%) is taking advantage of November's onset, switching to all holiday programming all the time and jumping to third in last week's cable ratings, averaging 1.78M viewers.
- The channel plans original films each year, and I'm Not Ready for Christmas drew 3.6M viewers on Saturday while Christmas Inc. pulled 2.5M on Sunday.
- For the week, Hallmark finished behind ESPN (DIS, 2.71M viewer average) and Fox News (FOX, FOXA, 2.29M average). It's planning original movies for each night during the Thanksgiving holiday weekend as well, and viewership for the first two weeks of November are up 89% over October's average.
- CBS won prime time among big broadcasters again, averaging 10.2M viewers, ahead of NBC (CMCSA, 8.3M), ABC (6.2M) and Fox (3.6M).
- NBC Nightly News won newscasts with 9.3M, ahead of ABC's World News Tonight with 8.8M.
Nov. 16, 2015, 10:54 AM
- Since its Q3 earnings in the summer, shareholders in Walt Disney (DIS -0.2%) have had to decide how much to worry about declines at the company's pay TV properties, particularly ESPN and its subscriber losses.
- In this month's Q4 call, the company downplayed worries about ESPN. Guggenheim, though, says it's a bigger problem than investors realize, downgrading the stock to Neutral.
- The share price now reflects upside from the company's intellectual property and parks, Guggenheim says, but it's now "incrementally" more concerned about pay TV than when it upgraded in April: "Notably softer ARPU growth across most distributors in 3Q provides reason for greater concern that 'skinny bundles' will further impact fully distributed networks, including ESPN." Impact to the segment's operating income has been modest so far, but the firm sees that gap widening as subs fall off.
- The firm has a fair value estimate for the stock of $115; Disney is trading at $114.63 today.
Nov. 13, 2015, 2:59 PM
- Walt Disney's (NYSE:DIS) under-construction Disney Shanghai resort anchors the Shanghai International Tourism and Resorts Zone -- and it also anchors some heavy hopes for Disney of a landmark new addition to its Parks & Resorts portfolio (in opportunities, if not so much in revenue).
- CEO Bob Iger has called the project the company's biggest opportunity since Orlando, where the company built the most visited vacation resort in the world.
- As Disney builds its 5,000 acres out, about six square miles of the zone are currently vacant, with decades of plans in place to draw tourists to the area (just half an hour from Shanghai's financial district). The company has said that 330M people with the disposable income to visit the park live within three hours.
- Disney has made adjustments to its Shanghai plans that delayed opening a bit, including adding more rooms than originally planned. It says it's learned from resort criticisms that it built Disneyland Paris too big, and Hong Kong Disneyland too small.
- In any case, Disney is set to raise the bar in China: About 70% of the country's theme parks lose money, 20% break even and only the other 10% are profitable, says a professor of theme park studies at Shanghai Jiao Tong.
Nov. 12, 2015, 6:57 PM
- If Hulu sells a stake to Time Warner (NYSE:TWX), it would be an equal partnership with existing co-owners, meaning it would draw down the stakes of the other three -- Disney (NYSE:DIS), NBCUniversal (NASDAQ:CMCSA) and Fox (FOX, FOXA) -- to 25% each.
- The move would definitely be a strategic play against Netflix and Amazon.com for the service, which has gotten increasingly active in the past year with new subscription models and aggressive moves into original programming and licensing products away from competitors. Content spending reportedly went to $1.5B this year from $600M in 2014.
- Time Warner wouldn't just be putting in cash, it would be committing to license content beyond what it's already sold. Time Warner owns TV powerhouse Warner Bros. along with HBO, and Turner Broadcasting and its properties.
- It suggests that a sale in whole that was discussed in 2013 is further off the table now. The WSJ reports that the current (preliminary) talks value Hulu between $5B and $6B.
- Nervous content owners may favor a stronger Hulu and its closer relationship to existing TV vs. Netflix (NASDAQ:NFLX), which they feel is accelerating cord cutting and lowering ratings. Netflix, which fell into the close down 3.5%, is off another 0.8% after hours.
- Previously: WSJ: Hulu looking at stake sale to Time Warner valuing it at $5B-$6B (Nov. 12 2015)
- Previously: With programming buildup, Hulu's losses increase (Nov. 06 2015)
- Previously: Hulu CEO: No current ambition for original movies, overseas expansion (Oct. 15 2015)
Nov. 12, 2015, 5:02 PM
- ABC (NYSE:DIS) is dipping its toe into original programming created for streaming -- not with a high-profile new over-the-top service, but by testing new material for its existing TV Everywhere-friendly app.
- The network is putting together a slate of programming that would only be available on the WatchABC app, Variety reports.
- WatchABC allows access to library content of current ABC series and a linear live stream in some markets, and some of the content is only available through TV Everywhere authentication, to pay TV subscribers.
- One project is in development for the effort already, it says: a short-form scripted comedy starring comic Iliza Shlesinger.
- Long-form series and unscripted work could appear too, though, in what could end up as a farm system for productions or talent.
Nov. 12, 2015, 4:00 PM
- Hulu is looking at a stake sale to Time Warner (TWX -0.9%) that would include cash and content licensing, The Wall Street Journal is reporting.
- The move would make Time Warner an equal stakeholder with the current owners -- Disney (NYSE:DIS), NBCUniversal (NASDAQ:CMCSA) and Fox (FOX, FOXA) -- and value the streaming video provider between $5B and $6B.
- Shares in Netflix (NASDAQ:NFLX) are sliding into the close, now down 3.9% to their lowest point since Tuesday.
- Previously: With programming buildup, Hulu's losses increase (Nov. 06 2015)
Nov. 11, 2015, 7:30 PM
- Walt Disney (DIS -0.8%) launched Disney Infinity 3.0 for the Apple TV today, and unlike many games for the box, it comes with a chunky controller usually seen with higher-end gaming consoles.
- That could prove a critical test of whether the platform could support more intense gaming, and present real competition to the top two consoles made by Sony (NYSE:SNE) or Microsoft (NASDAQ:MSFT).
- Most all games on Apple TV are controlled by the device's slender remote. But the Nimbus controller made by SteelSeries (specifically for Apple's device) features analog sticks and D-pads familiar to console gamers, and sells for $50 (but at a $15 discount in the Infinity 3.0 bundle).
- Disney's entry in the toys-to-life category has underperformed compared to Activision Blizzard's Skylanders -- also now on Apple TV -- but the combination of content brands that Disney can leverage for the free-form game, including Marvel and Star Wars, has kept hopes high for the platform.
- Previously: Disney Infinity 3.0 launches with 'Star Wars' characters (Aug. 31 2015)
Nov. 11, 2015, 9:35 AM
- Bob Iger -- chairman and CEO of Walt Disney (NYSE:DIS) -- is reportedly becoming chairman of the joint effort by the San Diego Chargers and Oakland Raiders to build a Los Angeles-area stadium.
- The project to build a new stadium in Carson, Calif., could push those teams to the L.A. market as soon as next season. Carson is in the south Los Angeles area, southeast of LAX and West of Disneyland home Anaheim.
- In the move, which the clubs could announce shortly, Iger would oversee all major initiatives with the stadium venture, guiding construction and operation.
- That project is competing with one led by Stan Kroenke, owner of the St. Louis Rams, to build a stadium in Inglewood and relocate. The Rams, Chargers and Raiders are in New York for a critical meeting to discuss Los Angeles relocations.
- If the Carson project goes forward, Iger could purchase a pre-arranged portion of either the Chargers or Raiders.
- Iger's contract with Disney expires in 2018, while he has a five-year deal and two-year option with the Carson stadium project.
Nov. 9, 2015, 12:46 PM
- As expected, hits returned to the box office this weekend after a few weeks of drought, with Bond beating Brown (... Charlie Brown).
- Spectre (SNE -0.7%) drew $73M to become the second-biggest debut in the James Bond series, behind 2012's Skyfall, which scored $88M in its opening. After an early opening overseas, Spectre is strong internationally with $200M this weekend and cumulative numbers that topped $300M.
- Spectre has a bit of a haul to profitability, though, as its production budget hit $250M.
- Meanwhile, The Peanuts Movie (FOX -2%, FOXA -2.1%) won by counterprogramming for families, scoring $45M, with 38% of the audience under 18 and giving positive word of mouth.
- Fox's The Martian, which marked a number of weeks at the top against weaker fare, grossed $9.3M to hold third place ($197.1M in six weeks) while Sony's Goosebumps got $7M for fourth ($66.4M cumulative) and Bridge of Spies (DIS distributing) $6.1M for fifth ($55M cumulative).
- Coming after the worst week of the year, this weekend likely puts the film industry back on track for the first ever $11B year in domestic box office.
Nov. 6, 2015, 6:22 PM
- Over-the-top video service Hulu has undergone a transformative year, adding ad-limited and ad-free subscription tiers, putting heavy investment into new content and exclusives, and focusing on building rather than selling, as it builds up to take on heavyweight Netflix and Amazon.com's video service.
- Its corporate parents -- NBCUniversal (NASDAQ:CMCSA), Disney (NYSE:DIS) and Fox (FOX, FOXA) -- are happy with that approach for now, which is good, as Hulu loses more money in the buildup.
- In Disney's earnings call, COO Tom Staggs acknowledged Hulu would keep stepping up programming investment, "and that will continue to increase their losses in the near term."
- The market is big enough, though, and "we feel good about where they're going strategically."
- In recent interviews, Hulu CEO Mike Hopkins has made clear the service isn't currently pursuing international expansion -- a sharp contrast with Netflix -- and that after the corporate parents eschewed a 2013 sale, an IPO or sale isn't in the near future until it builds up more.
Nov. 5, 2015, 6:18 PM
- Disney (NYSE:DIS) went into its earnings call relatively flat in after-hours trading and is now up fractionally as execs took questions about the film pipeline, parks, and cable TV.
- While CEO Bob Iger used the beginning of last quarter's earnings call to talk about ESPN subscriber losses -- talk blamed for driving media stocks down overall this summer -- the Q4 call started out all Star Wars. The company's pleased with ticket-sales excitement and looking ahead to videogames like Star Wars: Battlefront and a cavalcade of associated merchandise.
- Disney can't recognize revenue from the already-begun sales of (new) Star Wars consumer products until the movie opens, though execs say they're excited for the eventual inclusion in Q1, and merchandise tied to the previous films is building strength.
- ESPN was downplayed despite questions. There's nothing he'd retract from previous comments, Iger says: "We decided to be candid, I think refreshingly so, regarding sub losses in the last period. We feel there should be no reason to panic over comments like that ... We feel bullish about ESPN and ESPN's business."
- On the ESPN layoffs: "The best interpretation is that you should see it as not connected to anything else."
- With DisneyLife launching as a direct service in the UK, "We see the opportunity to grow across other markets," Iger says. "We are very interested in taking content directly to consumers as a company."
- Disney is declining to provide an outlook for the road ahead, though Iger did drop a minor bombshell on CNBC: "I can only tell you that Luke Skywalker is in the movie."
- Previously: Disney -1.3% after Q3 profit beats; revenues miss despite 9% growth (Nov. 05 2015)
- Previously: After months of dealing, Disney networks joining PlayStation Vue service (Nov. 05 2015)
Walt Disney Co together with its subsidiaries is a diversified entertainment company with operations in five business segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive.
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