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Fox May Squeeze ‘SportsCenter,' But Analyst Sees ESPN Ad Gains

A second quarter ratings slump and new competition has Wall Street keeping a close eye on ESPN, a key player in parent company Walt Disney Co.’s financial lineup.

In a new report, analyst Michael Senno of Credit Suisse, forecasts ad revenue gains in the 6% range for ESPN for fiscal year 2014 and in 2015, despite losing some ad sales for studio programming like SportsCenter to similar shows on the new Fox Sports 1.

Senno says that most of ESPN’s ad revenue-about 65%–comes from live events, making it less susceptible to rivals because there’s strong demand for ESPN’s events and because the events it competes with aren’t new, just on different channels.

“However, we expect competition from FS1 to pose a risk to ad revenue from sportscasts,” says Senno, who figures those programs account for 28% of ESPN’s revenue. “We estimate lost market share due to competition could result in 1.4% headwind in 2014.”

Overall, Senno sees ESPN’s ad revenue growth up 6.6% in 2014 and 6.2% in 2015, helped by the World Cup and the new college football playoff system. And he’s raising his estimate for Disney’s 2014 by 3 cents a share to $3.95 partly because of higher cable earnings. ESPN accounts for more than 70% of Disney’s cable network ad revenue.