ESPN Sub Losses Cost Disney $700M

New filing provides details on cable network problems

The Walt Disney Co. said that ESPN lost 3 million subscribers during the fiscal year and had dropped 7 million over the past two years.

According to Disney's 10-K filing with the Securities & Exchange Commission, released Wednesday, ESPN2 was also down 3 million subs, and most other networks owned or co-owned by Disney reported declines.

The sub losses, discussed but not quantified by Disney CEO Bob Iger during Disney’s third-quarter earnings call in August, sent media stock reeling by raising investor concerns that cord-cutting, cord-shaving and cord nevers were having a significant impact on the highly profitable pay-TV ecosystem.

Looking at the figures showing ESPN at 92 million subs, down from 99 million in 2013, analyst Marci Ryvicker of Walls Fargo estimated that the losses cost Disney $700 million in affiliate revenue in fiscal 2015. That would lead to a decline of cable earnings of $200 million, Ryvicker estimated.

“Given recent comments made by CEO Bob Iger combined with the lowered guide from August, we would characterize the 10-K numbers and our analysis as more affirmation than surprise,” Ryvicker said in a report Friday. “That said, it doesn’t change our cautious view on the stock or on the media space as a whole given that long-term affiliate fee growth remains in question.”

According to the filing, Disney Channel has 95 million subscribes, down 2 million from 2014. ABC Family was down 2 million to 94 million.

At A+E Networks, a joint venture of Disney and Hearst, A&E Network was down 3 million subscribers to 94 million, History was down 2 million to 95 million subscribers and Lifetime was down 2 million to 94 million subs. Lifetime Movies and H2 (soon to become Viceland) were flat and FYI was up 4 million subs to 69 million.