ESPN To Enter The Streaming Service Business With ESPN Plus

Ann Santiago
February 9, 2018

Disney said it earned an adjusted $1.89 a share, compared to the $1.61 that Wall Street expected for the quarter ending. The House of Mouse, however, missed Wall Street estimates with a revenue increase of 4% to US$15.4 billion.

Disney reported net income of $4.42 billion, boosted by a $1.6 billion one-time tax benefit from the new federal income tax legislation.

The service will be called ESPN Plus, and live inside a new app that will be launched by the sports broadcasting network in spring 2018 - much earlier than Disney's more general subscription streaming service that will launch in 2019.

ESPN is hoping to stem its losses from dropping membership in recent months by directly competing against the old model of pay television channel bundles.

Plus will give subscribers access to thousands of more games and more leagues, including Major League Baseball, the National Hockey League, Major League Soccer, college sports, grand slam tennis, rugby, cricket and boxing. "If anything points to the future that ESPN looks like, it will be this app and the experience it provides", he said. The decrease in operating income was due to lower advertising revenue, higher production cost write-downs and a decline in program sales income, partially offset by affiliate revenue growth due to rate increases.

Media networks revenues for the quarter was flat at $6.2 billion and segment operating income decreased 12 percent to $1.2 billion. Iger is also enthused about the next Marvel movie, Black Panther, which has been getting strong word of mouth and praise from critics.

Steven Cahall, an analyst at RBC Capital Markets, said: "We see good momentum in Disney's results that support a long-term rerating story around streaming/direct to consumer".

BAMTech, in which Disney acquired a majority stake late past year, is building the "guts" of Disney's apps, Iger said, but editorial oversight is being handled by Disney.

"Our ultimate intention is to create and to ultimately grow a global, direct-to-consumer business that will take advantage of the production output that the combined companies will have", Iger said.

Last year, Disney announced its plans to launch a pair of streaming services - one to represent its own branded content and one to represent ESPN content.

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