Disney beats quarterly forecast partly on success of ESPN

After kicking off a wave of cord-cutting anxiety and media-stock bloodletting on Wall Street in early August by lowering its guidance for ESPN, Walt Disney Company chief executive Bob Iger had more reassuring news during his conglomerate's fourth quarter earnings call.

Disney's net income rose over 7 percent in the quarter to $1.61 billion, beating investor forecasts and driven by the improved performance of ESPN and other Disney-owned networks. 

Disney's media networks, which include ESPN, the Disney Channel and ABC, recorded a 27 percent increase in revenue to $1.8 billion. 

The report comes after ESPN laid off 300 employees last month. 

A narrative has emerged in recent weeks among analysts, suggesting that in obtaining high, $6-plus per subscriber fees from pay-TV operators in its last rounds of negotiations, ESPN left contract holes that allowed these operators to downgrade its networks in skinny bundles. 

Analysts accuse Disney/ESPN of essentially valuing price inflation over minimum guarantees on carriage. 

Asked by one investment analysts about this during the company's conference call, Iger didn't answer directly. "We feel bullish about ESPN and ESPN's business," he said, according to a Seeking Alpha transcript of his remarks. "We like the environment, because we think long-term it gives us more opportunities. I should also add that ESPN has been at the forefront of using technology to create more compelling product for its consumers and to be present on more platforms."

Iger also addressed what he termed to be unnecessary investor "panic" caused by Disney's downgrading of its guidance last quarter. 

"To just reiterate what we did, we updated guidance that we had given in 2014 about ESPN sub-fees, and that guidance holds today," he said. "We also decided to be candid, I think maybe refreshingly so, about what the industry was experiencing in terms of sub losses during roughly the last period. And we feel that there certainly should be no reason to panic over comments like that."

For more:
- read this Seeking Alpha transcript
- read this Reuters story
- read this Broadcasting & Cable story

Related articles:
Report: ESPN mulling layoffs of 200-300 staffers amid shifting pay-TV landscape
ESPN scratches and claws to sustain its margins amid souring pay-TV economics
Pay-TV execs are clearly 'disconnected from reality:' Change isn't 5 years away, it's now
Programmer and pay-TV stocks get crushed as ESPN woes spur concerns of cord cutting, skinny bundles

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