Here's how TV channel can get its mojo back

pulse

January 30, 2017 8:01 PM

Disney has been struggling of late due to falling ESPN advertising revenue and 2% annual subscriber erosion at ESPN.

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ESPN has been having a tough time of it.

Disney has been struggling of late due to falling ESPN advertising revenue and 2% annual subscriber erosion at ESPN for the last three years.

Programming costs were also higher toward the end of last year, escalated by the costs of Olympics programming, rights to air the World Cup of Hockey, and higher rates for college sports.

"It remains a time of transition at Disney, as it evolves its ESPN/ABC distribution model to attempt to reach consumers that have been opting out of the pay-TV bundle," according to the team.

They expect ESPN to launch an à la carte service, like CBS and HBO have. "We expect the la carte and bundled offerings will co-exist for a long time, creating more earnings stability than the market presumes."

Morgan Stanley also note that new initiatives across Disney's domestic and international parks like the recently opened park in Shanghai could drive significant return on investment and lift earnings power.

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