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Disney Earnings Seen Growing Despite ESPN

The Walt Disney Co. is expected to report higher earnings in the March quarter despite a big drop in ad revenues at ESPN.

Disney reports financial results for its second fiscal quarter after the market closes Tuesday. Consensus is earnings will be $1.40 a share on revenues $13.2 million, up 6%, partly because The Force is still with Disney.

The sports TV giant is expected to show a 14% decline in advertising revenues, partly due to lower ratings, partly due to the shift of college football’s playoff games from New Year’s Day to New Year’s Eve. Earnings will be up double digits for the cable networks group because programming costs also shifted to the previous quarter.

Analysts and investors will be listening in to Disney’s earnings call to see if ESPN has also been affected by cord cutting and what plans CEO Bob Iger has to get into the over-the-top and direct-to-consumer markets.

Disney’s broadcasting group, including ABC, is expected to post 1% higher revenue despite a 4% decline in ad revenue—three points of which is the result of ESPN’s college football games airing on New Year’s Eve on ABC—traditionally a money maker for ABC. Analyst Michael Nathanson sees the station group flat but syndication revenues up because of the studio delivering season 2 of Daredevil to Netflix. Earnings for the TV group should be down about 18% to $250 million.

Analyst Marci Ryvicker said Disney will also face headwinds in its TV business because of bigger investments in Hulu and lower equity income from A+E Networks.

Disney’s earnings from its theme parks should be up 4%.

But the big gains at Disney are at its movie studio. With some money still coming in from Star Wars: The Force Awakens and the better than expected box office for Zootopia, film profits should be up about 35%.