Feb 8, 2017

ESPN is Disney's black sheep

Greg Ruben/Axios

Walt Disney shares fell more than 1.5% after investors learned the full scope of ESPN's troubles. How bad is it?

  • Revenue: Disney's Media Networks unit, led by the ESPN franchise, saw revenues fall 2% to $4.4 billion,vs investor expectations of $4.53 billion. Disney CEO Robert Iger faulted ESPN for the revenue decline, citing a loss in advertising dollars combined with an increase in production costs for a new NBA agreement and contractual rate increases for NFL programming.
  • Subscriptions: ESPN lost more 2 million subscribers in FY 2016, bringing their total subscriber number to 90 million, down 10% from 2011. According to Nielsen, ESPN lost over half of a million subscriptions in November 2016 alone and the pattern extends across the board to ESPN2 and ESPNU.
  • Advertising: ESPN's ad revenue was down 7% in Q4. Disney executives blame the decline on lower impressions and rates, both of which they say were impacted by a timing shift of college football playoff games. So far this quarter however, ESPN's ad sales are pacing up compared to last year.

What's next: Expect to see more ESPN content provided through streaming services, like Hulu and Netflix, in 2017. Iger told investors that his confidence in ESPN lies in deals the network has made with OTT (over the top) streaming service providers, like Hulu. He also conceded to investors that the standard advertising model ESPN and other Disney-owned networks rely on is no longer working.

Why it matters: Disney executives are acutely aware of how much "cord-cutting" — people ditching cable subscription packages for streaming services — is affecting their business, which is why they are taking strategic steps to pivot their strategy to streaming. In the call with investors, Iger touted Disney's $1 billion investment in MLB's streaming division called BamTech, which they have previously said will work with Disney to create an ESPN-branded subscription streaming service.

Go deeper

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 2 p.m. ET: 5,453,784 — Total deaths: 345,886 — Total recoveries — 2,191,310Map.
  2. U.S.: Total confirmed cases as of 2 p.m. ET: 1,651,254 — Total deaths: 97,850 — Total recoveries: 366,736 — Total tested: 14,163,915Map.
  3. World: Top Boris Johnson aide defends himself after allegations he broke U.K. lockdown — WHO suspends trial of hydroxychloroquine over safety concerns.
  4. 2020: Trump threatens to move Republican convention from North Carolina — Joe Biden makes first public appearance in two months.
  5. Public health: Officials are urging Americans to wear masks over Memorial Day.
  6. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Charities refocus their efforts to fill gaps left by government.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 37 mins ago - Politics & Policy

Joe Biden makes first public appearance in over two months

Photo: Oliver Douliery/AFP via Getty Images

Former Vice President Joe Biden made his first in-person appearance in over two months on Monday to honor Memorial Day by laying a wreath at a Delaware veterans park, AP reports.

Why it matters: Biden, the Democratic Party's presumptive nominee, has taken the unprecedented step of campaigning from his home during the coronavirus pandemic, ever since canceling a rally in Cleveland on March 10.

WHO temporarily suspends trial of hydroxychloroquine over safety concerns

Photo: Fabrice Coffrini/AFP via Getty Images

The World Health Organization is temporarily pausing tests of the anti-malarial drug hydroxychloroquine as a coronavirus treatment in order to review safety concerns, the agency's director-general Tedros Adhanom Ghebreyesu said Monday.

Why it matters: The decision comes after a retrospective review published in The Lancet found that coronavirus patients who took hydroxychloroquine or its related drug chloroquine were more likely to die or develop an irregular heart rhythm that can lead to sudden cardiac death, compared to those who did nothing.