Dis­ney em­braces stream­ing as rat­ings sag

Kuwait Times - - TECHNOLOGY -

NEW YORK: As more and more peo­ple get their fa­vorite TV shows and movies on­line, Dis­ney is also learn­ing to em­brace the stream. The Walt Dis­ney Co. once re­sisted of­fer­ing chan­nels like ESPN di­rectly over the in­ter­net, pre­fer­ring old-fash­ioned ca­ble sub­scrip­tions. Its in­vestors are fret­ting over rat­ings as more peo­ple cut the cord and can­cel ca­ble or satel­lite ser­vice. NFL game view­er­ship is also down, and the con­tentious elec­tion drew view­ers away from Dis­ney net­works like ABC to ca­ble news net­works.

Dis­ney stock was down 9.6 per­cent for the year, at Thurs­day’s clos­ing. But de­spite a weaker-than-ex­pected earn­ings re­port, which showed a drop in ESPN rev­enue, shares rose more than 2 per­cent late Thurs­day af­ter an ini­tial dip in ex­tended trad­ing.

The media con­glom­er­ate, which owns Mar­vel, Star Wars and its own Pixar and Dis­ney Stu­dios, is forg­ing ahead with new stream­ing deals in­volv­ing Net­flix, Hulu and oth­ers. “Dis­ney is the one media com­pany that can suc­ceed in tak­ing its brands di­rectly to con­sumers,” said No­mura an­a­lyst An­thony Dicle­mente. He ex­pects Dis­ney could one day of­fer ESPN as a stand-alone ser­vice, for ex­am­ple, sim­i­lar to HBO’s $15-a-month “HBO Now.”

Bur­bank, Cal­i­for­nia-based Dis­ney hasn’t gone that far yet. But last quar­ter it took a $1 bil­lion stake in BAM Tech, which pro­vides stream­ing for Ma­jor League Base­ball. The com­pany said it plans to use that tech­nol­ogy to of­fer an ESPN stream­ing ser­vice that of­fers live game stream­ing and pro­gram­ming not of­fered on reg­u­lar ESPN. The BAM Tech deal is a “great way for us to move ESPN and prob­a­bly other Dis­ney as­sets into digital, mo­bile plat­forms in a more ef­fec­tive way,” Dis­ney CEO Bob Iger said at a Gold­man Sachs con­fer­ence in New York in Septem­ber. It’s also a way for Dis­ney to learn more about its view­ers for ad­ver­tis­ing pur­poses, he told an­a­lysts on a con­fer­ence call Thurs­day.

Mean­while, in the UK there is Dis­ney Life, launched a year ago, a 10 pound ($15) monthly ser­vice that of­fers Dis­ney movies, TV shows, e-books, and other chil­dren’s con­tent on­line. Iger said Dis­ney wants to learn from that ser­vice be­fore launch­ing a sim­i­lar ser­vice in the United States.

While there’s some “in­evitabil­ity” to launch­ing a sim­i­lar ser­vice in the US, “I’m not pre­pared to dis­cuss tim­ing,” Iger told an­a­lysts. “You can use that as a tem­plate for what they might do in the US,” No­mura’s Dicle­mente said. So far in the US, Dis­ney has been work­ing with stream­ing ser­vices Hulu and Net­flix to bring its prop­er­ties to the stream. Its deal with Net­flix, inked in 2012, fi­nally kicked in this Septem­ber, and gives Net­flix the right to stream Dis­ney movies like “Zootopia” be­fore oth­ers. Net­flix is also the ex­clu­sive home for Mar­vel TV shows like “Jes­sica Jones” and “Luke Cage.”

And last week, Hulu said there would be a Dis­ney chan­nel on its up­com­ing live on­line TV ser­vice. Dis­ney owns part of Hulu, which is a joint ven­ture be­tween Dis­ney, 21st Cen­tury Fox and Com­cast’s Nbcuniver­sal and Time Warner.

In short, Dis­ney is adapt­ing to the stream, and those ef­forts will pay off even­tu­ally, Dicle­mente said. In­vestors hope that day comes soon. Dis­ney re­ported Thurs­day that fis­cal fourth-quar­ter net in­come rose 10 per­cent to $1.77 bil­lion, while sales fell 3 per­cent to $13.14 bil­lion. But ad­justed earn­ings amounted to $1.10 per share, which fell short of Wall Street es­ti­mates. An­a­lysts sur­veyed by Fac­tset were ex­pect­ing $1.16 per share on rev­enue of $13.5 bil­lion.

Move to digital

—AP

SAUGUS, MAS­SACHUSETTS: This Jan. 31, 2014, file photo shows plush Dis­ney char­ac­ters piled up in a dis­play at a Dis­ney Store.

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