Sports fans should start saving up, because sooner than they think they’ll be paying the price for non-sports observers realizing they don’t need cable television. ESPN is reportedly dragging down the value of Disney, and it’s currently being hidden by the hoopla of Star Wars, according to The New York Times.
Richard Greenfeild, a media analyst for BTIG, went out on a limb and advised clients to sell Disney’s stock, per The Times. He believes that Star Wars will continue to be a cash cow, but ESPN’s on the verge of making major cuts again because of declining cable subscribers.
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“Investors must remember that at its core, Disney is a cable network company that has the highest level of fixed costs (sports rights) in the industry,” Greenfield said. “ESPN now appears poised to become Disney’s most troubled business as consumer behavior shifts rapidly.”
Not only will sports consumers need to pay more to account for the lost revenue of their disappearing subscribers, the stock could take a big hit. Greenfield projects Disney, which is trading at $106.50 a share, to drop to $90 in the next 12 months. He also said the ESPN drain will put undue pressure on their movies to continue hitting big without any missteps.
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“It puts incredible pressure on the films. They all have to be massive successes. That’s just tough,” Greenfield said.
There has been talk about ESPN following a popular model called O.T.T. (over-the-top), and not as part of cable “bundles,” but a large portion of the TV audience will still want the bundles, and not have to choose all of their programming selectively. For those viewers, there will be a rise in cost that could eventually force away more consumers.
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