Walt Disney Co FQ3 2017 Earnings Preview: ESPN In Focus Again

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Walt Disney FQ3 2017 earnings are scheduled for Tuesday after closing bell, and the consensus estimates currently stand at $1.55 per share in earnings on $14.46 billion in revenue. In last year’s third fiscal quarter, the House of Mouse reported $14.28 billion in revenue.

Focus on ESPN in Walt Disney FQ3 2017 earnings

ESPN was once a major part of Disney’s growth, but the cord-cutting trend has cut into the cable sports network’s revenues in recent years. The sports cable network and Disney’s other cable and media networks are expected to contribute about $5.93 billion in revenue to Walt Disney FQ3 2017 earnings. The theme parks and resorts segment is expected to make up the next-largest chunk of the company’s revenue at $4.83 billion, followed by the film studio segment at $2.46 billion and then consumer products at $1.23 billion.

Subscriber numbers for ESPN have been falling, and the network was forced to let some of its well-known broadcasters go. Disney management has made the cable sports network a key focus of their earnings calls in recent quarters, with CEO Bob Iger highlighting the demand for live sports coverage. Because of how widespread cord-cutting has become, Walt Disney was planning to build an over-the-top streaming service for ESPN.

ESPN hit by cord-cutting

Across the board, analysts covering the media industry predict that some 1 million pay-TV subscribers will abandon their cable TV in search of less expensive options for in-home entertainment. Streaming service providers such as SlingTV, DirecTV Now, PlayStation Vue and newer offerings such as YouTube TV should help offset some of the revenue declines from those subscriber losses, especially later this year when YouTube TV comes online in more markets.

Although ESPN is included in some of these streaming TV services, the main reason premium sports networks are often excluded from them is because of the high costs of live sports coverage. TV networks must pay for the rights to broadcast games from professional sports leagues such as the NBA, which raises the cost of sports programming.

Disney theme parks, movie releases to support growth

Walt Disney has enjoyed strong growth at its Shanghai theme park over its first year in operation, although its theme parks at home have been faced with strong competition during the peak summer travel season. Investors and analysts will be watching to see how the company’s U.S. theme parks did during the third fiscal quarter.

Another area of focus will be Disney’s movie business, which so far has struggled to stand up to the strength of last year due to the release of Star Wars: The Force Awakens. The year-over-year comparisons for the segment were likely difficult during the Walt Disney FQ3 2017 earnings period, although several new Marvel movies are expected to lift the company’s results the rest of this year.

Shares of Walt Disney slumped by as much as 1.08% during regular trading hours on Monday, falling as low as $106.53.

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