Disney Co.’s recent financial disclosures have eased concerns among investors on Wall Street, as the company’s ESPN business continues to generate steady revenue. However, the real challenge lies ahead – can ESPN grow again?
In its latest financial report, Disney revealed that its domestic ESPN business, which includes both the linear ESPN networks and the ESPN+ streaming service, achieved a 3% revenue growth in the first nine months of the fiscal year. Despite being considered modest, this growth significantly outperformed the overall U.S. linear TV market, where Disney’s linear networks saw a 6% decline.
Looking to the future, Disney has plans for expanding ESPN. The company has hinted at the launch of a streaming service for its flagship network and may consider bringing on equity or strategic partners. It is evident that Disney aims to grow its ESPN business.
Analysts are optimistic about ESPN’s future prospects. Morgan Stanley’s Benjamin Swinburne acknowledges that while ESPN has been more stable than expected, the key question remains: Can it regain growth?
Disney’s efforts to leverage new opportunities and adapt to the changing landscape of the media industry will play a vital role in determining ESPN’s future success. As the company explores innovative strategies, investors eagerly await the next chapter for Disney’s beloved sports business.
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ESPN’s Operating Income and Disney’s Sports Assets
According to industry analysts, challenges lie ahead for ESPN as it navigates through the ongoing trend of cord-cutting. However, there is a glimmer of hope for the sports broadcasting giant. With a more stable foundation than previously anticipated, ESPN is expected to benefit from increased engagement levels in its live content and shoulder programming.
Brian Swinburne, an analyst, believes that the stabilization and potential growth of ESPN’s operating income will have a positive impact on the company’s shares. In fact, he rates the shares as overweight with a target price of $105.
Another analyst, Laurent Yoon from Bernstein, also acknowledges the top-line stability of Disney’s sports assets. However, he highlights the need for ESPN to prove itself as a sports aggregator amid rising sports rights costs. Yoon suggests that ESPN may seek partners to share the economics or consolidate more sports under one roof to solidify its position as a true sports aggregator.
Yoon recently assigned an outperform rating to Disney shares, accompanied by a target price of $103.
Overall, while ESPN faces significant challenges, it has the potential to overcome them with its focus on engaging content and exploring new partnerships. Disney’s sports assets can play a crucial role in the company’s future success.
