Nielsen released a new ranking of companies in the media distribution business, including broadcast, cable and streaming, and The Walt Disney Co. was at the top of that list.

At a time when it appears that streaming is taking over the television business, the new ranking has YouTube as No. 2 followed by traditional media companies NBCUniversal, Paramount Global and Warner Bros. Discovery.

Netflix, the streaming powerhouse with no traditional media assets, was fifth.

The news comes on the morning of Disney’s upfront presentation. Disney's media assets include broadcast network ABC, cable programmer ESPN and streaming platforms Disney Plus and Hulu.

The rankings reflect share of television usage in April.

“With more programs available across platforms, it’s vital for creators, advertisers and the industry at large to understand what and where audiences are watching,” Nielsen CEO Karthik Rao said. “The Media Distributor Gauge is a perfect complement to The Gauge and serves as the first convergent TV comparison of its kind. Together, these reports paint the most complete picture of TV viewing today, which is critical as we head into the upfront.”

Nielsen also released its regular monthly snapshot of television usage, which showed streaming had a 38.4% share of viewing in April, followed by cable at 29.1% and broadcast with 22.2%.

The TVB, which represents local TV stations, groused that the new distributor report does not take into account how much of each company's viewing is commercial free.

"The Gauge reports combine all video platforms in one analysis – without separating ad-supported viewing from non-ad supported viewing – which misleads marketers into thinking their commercials can reach significantly more streaming viewers than is possible or the reality,” said TVB CEO Steve Lanzano.

“Advertisers’ commercials are only available on ad-supported video platforms. When viewing of ad-supported platforms is analyzed alone, the results are very different from what is shown in the Gauge reports because a large number of streaming viewers do not receive ads. Advertisers need these facts when considering video media investments," Lanzano said.

The Walt Disney Co. CEO Bob Iger told analysts he wasn’t overly concerned that the company’s new streaming sports venture would accelerate cord-cutting.

Wall Street has been concerned the sports venture, announced Tuesday, would further damage linear TV, and most media stocks were down on Wednesday.

Responding to a question on Disney’s fiscal first-quarter earnings call Wednesday, Iger said the new sports venture was aimed at consumers who either have already cut the cord or never subscribed to pay TV.

While linear channels are eroding, Iger added, Disney has streaming services that will pick up the slack and minimize any potential financial consequences.

Also Read: New Sports Venture Not Open To Additional Partners: Lachlan Murdoch

“Understand that we are going to get paid in this new joint venture for our channels at a level that’s commensurate with a level that we get paid for those channels in the multichannel ecosystem,” Iger said. “So if a consumer moves out of [pay TV] and then into this, then what we get paid for the channels that are in it is equal to what we get paid [by traditional distributors].”

Iger acknowledged that Disney has channels that will not be included in the sports bundle, but said the economic impact of those networks losing subscribers would be “de minimis” to the company.

Also Read: Fubo Announces 'Streaming Joint Ventures Rarely Work'

“We're backstopped in all the channels with the content that exists or that we ultimately put on Hulu and Disney Plus,” he said. “So for us, it’s very low-risk and actually, as I talked earlier, potentially quite accretive to us in terms of signing up sports fans that have never signed up for the bundle or that might no longer want it.”

On the call, Disney was bullish on the sports business in general and ESPN in particular.

Iger announced that Disney would be rolling out a direct-to-consumer version of ESPN in fall 2025. The DTC service will make ESPN’s channels available via streaming to people who aren’t subscribed to pay TV.

“That will be a very, very immersive, obviously sports-centric app, which will have features that this combination with Fox and with Turner Time Warner Discovery will not have, such as integrated betting, integrated fantasy, likely to have some sales arm or merchandise capabilities, obviously a deep dive into stats, and high degree of customization and personalization,” he said. “That will make the product compelling to younger sports fans in particular.”

Iger noted that the DTC version of ESPN will be available as an add-on to Disney Plus, similar to the arrangement now in the works with Hulu.

Bundling leads to higher engagement, lower churn and greater advertising potential, he said.

“We've already seen an incredible response to the beta launch on Hulu for Disney Plus, which has far exceeded every metric,” he added.

Disney continues to look for content and marketing partners for ESPN.

“We've made progress towards securing deals and we expect to have more to share with you in the near future,” he said. 

“Ultimately our mission is to make ESPN into the preeminent digital sports brand, reaching as many sports fans as possible and giving them even more ways to access the programming they love in whatever way best suits their needs,” he said.

The Walt Disney Co. said it promoted Tinisha Agramonte to senior VP and chief diversity officer. 

Agramonte had been VP of diversity, equity and inclusion talent outreach & development with Disney Parks, Experience and Products.

She will report to Sonia Coleman, senior executive VP and chief human resources officer.

Agramonte succeeds Latronda Newton, who left Disney in June. 

“Among each of our teams and in every community where we live and work around the world, Disney is committed to building a more inclusive and respectful world,” Coleman said. “Tinisha Agramonte is an integral member of our executive leadership, and a dedicated, well-respected leader within Disney. As our new CDO, Agramonte’s expansive knowledge and expertise, having worked in a variety of industries, will allow us to continue creating a welcoming environment for our employees globally.”

Agramonte joined Disney last year from Motorola Solutions, where she was chief diversity officer. Before that she was CDO and director of the Office of Civil Rights in the Department of Commerce.

“I’m honored to take on this role at a beloved brand, which impacts people around the world,” Agramonte said. “Throughout my career, I’ve had the privilege to help foster environments where all voices are heard, where individuals from all backgrounds have equitable access and opportunities to thrive, and where innovation flourishes because of our collective strengths. I am proud to continue those efforts alongside our incredible leaders and employees here at Disney to optimally achieve our company’s mission to entertain, inform and inspire people around the globe through the power of unparalleled storytelling.”

Underscoring a weak market for TV advertising, analyst Robert Fishman of MoffettNathanson Research has cut his forecast for the second-quarter ad revenue figures media companies will be reporting over the next few weeks.

Fishman said he expects The Walt Disney Co. to report a 6% drop in cable ad revenues in calendar Q2, compared to his earlier estimate of a 3% drop. He also expects Paramount to report a 17% drop in cable ad revenue, compared to the 15% decline forecast earlier, and AMC Networks’s ad revenue to be down 12%, compared to 10%.

That would lower Fishman’s forecast for second-quarter cable advertising revenue to $4.48 billion, down 12.3% compared to a year ago. Fishman’s previous forecast called for an 11.3% decline.

For the broadcast business, Fishman expects Paramount-owned CBS to be up 1.4%, compared to an earlier forecast of a 2.4% gain, and for Disney’s ABC to be down 16% versus his earlier forecast of a 15%  drop.

Fishman now sees total broadcast ad revenues of $2.47 billion, down 8.3%, compared to his earlier forecast of $2.48 billion, down 7.8%.

Total national TV ad revenue is now expected to be down 10.9% to $6.95 billion, compared to dropping 10.1% to $7 billion.

Meanwhile, Fishman sees ad revenue for the big direct-to-consumer platforms rising 19.7% to $2.26 billion.

Among the media company-owned streamers, Fishman sees revenue rising 67.8% Paramount Plus, 32.2% at Peacock, 29.8% and 4.1% at Warner Bros. Discovery’s Max and Discovery Plus. He sees Pluto TV revenue as down 3% and Hulu down 8% in the quarter.

Fishman also sees The Roku Channel growing by 5.5% and the new ad-supported tiers for Disney Plus and Netflix generating $138 million and $119 million in Q2 ad revenue, respectively.

“While we have never put a whole lot of weight behind the outcome of the upfronts, this year’s is worth paying closer attention,“ Fishman said. ”Previously, advertisers were forced to hold their noses and accept CPM increases as lowered ratings also meant lowered supply, and alternative options for broadscale premium reach remained limited. This year, FAST channels and AVOD services are delivering a fresh pool of inventory, increasing supply, and cord-cutting and ratings declines outside of sports have eaten into just how much reach television is able to deliver.” 

As a result of the ad-revenue weakness, which Fishman said might not be a short-term phenomenon, the analyst has also cut his stock price targets for AMC Networks ($14 a share versus $18 previously, Warner Bros. Discovery ($15 vs. $16) and Paramount ($11 vs $12).

Ryan Murphy bolted Fox for Netflix in 2018, one of several mega-producers, Shonda Rhimes along with him, who signed eye-popping $300 million-plus deals with the subscription streaming giant at the time. 

Now, it looks like Murphy is returning to the former Fox studio. According to numerous published reports (we'll cite Bloomberg), Murphy has no plans to re-up his expiring five-year deal with Netflix and is instead negotiating with The Walt Disney Co., now corporate home to the 21st Century Studios and FX brands, upon which Murphy first built his own powerful brand with hits like Glee and American Horror Story. 

Also Read: We’re Not Just Imagining It, Netflix Viewing Really Is Down From Last Year

At Disney, Ryan would be reunited with Disney Entertainment co-chair Dana Walden, who headed 20th Century Fox Television when the producer was on the lot. 

Disney acquired Fox's entertainment studios and other assets, including the FX cable brand, in 2019. 

Murphy is coming off a prolific year for Netflix, hoisting back to back hits last fall — Dahmer-Portrait of a Serial Killer and The Watcher. Both limited series wound up on Netflix's ranking of all-time best 28-day openings for English language TV shows. Netflix is in the process of expanding Dahmer into a full franchise of limited series based on serial killers.  

As The Walt Disney Co. studies when to create a standalone, direct-to-consumer version of ESPN, MoffettNathanson senior research analyst Michael Nathanson is calling time out.

Nathanson said he thinks Disney would be better off keeping ESPN in the Disney bundle with Disney Plus and Hulu.

The combination “will deliver enough premium content to reduce churn, aggregate engagement and substantial non-programming cost savings,” Nathanson said. 

“We believe that a sports-only streaming app is a tough model and that sports integrated in a general entertainment service a la Peacock or Paramount Plus makes more sense,” he said. “Given the current light penalties for cheating the MVPD system, we would argue that Disney could create more stickiness and audience flow integrating ESPN into Hulu and Disney Plus than trying to build a standalone premium service.” 

Nathanson notes that the current Disney bundle of Hulu, Disney Plus and ESPN Plus has a churn rate lower than Netflix and three times lower than the rest of the streaming industry.

Nathanson also noted that the bulk of Disney’s current 25 million ESPN Plus subscribers are already bundled customers. (The bundle has 20 million three-service subscribers.)

The Walt Disney Co. named Asad Ayaz as its chief brand officer, a new position at Disney.

Ayaz has been president of marketing for The Walt Disney Studios since 2018. He will report to CEO Bob Iger, who continues to reorganize and restructure the company.

In his new post, Ayaz will be responsible for stewarding the Disney brand globally across company touchpoints and consumer experiences. He will lead a global consumer research and analytics function focused on Disney’s brands and franchises that results in cross-platform initiatives, the company said.

He will also continue in his studio role, reporting to Disney Entertainment co-chairman Alan Bergman.

“Asad is an exceptional creative leader with a deep understanding of what Disney means to millions of people around the world,” Iger said. “His taking on this role is particularly noteworthy and consequential as we commemorate our historic 100th anniversary, and I am confident that his strategic, operational and creative prowess, along with his profound passion for Disney, will make him an outstanding steward of our stories, characters, brands and franchises.”

Ayaz has been with Disney for 18 years, marketing Star Wars, Marvel and Disney Animation hits. 

He recently led the development and creation of the “Disney100 Special Look” spot that debuted in this year’s Super Bowl, as well as the Studios’ new 100-year logo refresh now appearing on all Disney-branded films. He will oversee the Disney100 campaign as the company celebrates its 100th year.

Pro football fans will get to watch a second spring football league in 2023 as the upstart XFL league Tuesday reached a multiyear distribution deal with the Walt Disney Co. and ESPN to air all of the league’s regular-season and playoff contests.

The XFL, owned by a group led by actor Dwayne Johnson, will launch February 18, 2023 and will air all of its regular season games on ABC, ESPN, and FX, the parties announced during Disney’s upfront presentation Tuesday. The agreement also includes exclusive content rights across ESPN’s digital, social and direct-to-consumer outlets such as ESPN Plus. 

“The XFL will tap into sports fans’ deep love of football by emphasizing competitive action while dedicating itself to innovation and entertainment,” said Jimmy Pitaro, chairman, ESPN and Sports Content in a statement. “You can see a great path to success when you combine the reach and influence of ESPN and Disney with the collective vision of XFL leadership led by Dany, Dwayne and Gerry.”

Also: Stars Shine Bright at Disney Upfront

Johnson, along with business partner and wife Danny Garcia and RedBird Capital, led by founder and managing partner Gerry Cardinale, purchased the league in August 2020 from World Wrestling Entertainment chairman and CEO Vince McMahon. 

The XFL initially launched in 2001 as a collaboration between the WWE and NBC but was shut down after one season. McMahon resurrected the league in 2020 but ceased operations in the middle of the season due to the COVID-19 pandemic. The deal comes as competing Fox Sports-controlled spring football league the USFL continues its inaugural season with games airing on Fox and NBC.

Johnson said the Disney-XFL deal is a “definitive moment” for the league. “We’re excited to be working with global visionaries that are aligned with the XFL’s values, are true team players and share our ambitious goals to grow the XFL as a global sports and entertainment business,“ he said. ”Through the combined power of Disney and the XFL, together we will create a new powerhouse on the sports calendar and bring a dynamic game of football to fans everywhere. Time to ball out.” ■ 

The Walt Disney Co. said Friday that it has named former J.P. Morgan media analyst Alexia Quadrani as senior VP of investor relations. She will report to Disney’s senior executive VP and chief financial officer Christine McCarthy.

Quadrani replaces Lowell Singer, who left Disney last year. As head of investor relations, Quadrani will serve as the company's chief liaison with Wall Street and a key adviser to its senior management. Her responsibilities will include expanding Disney’s relationships with both sell-side and buy-side investment analysts, industry analysts and investors globally, providing input on Disney’s financial reporting activities, managing stock share administration and leading ongoing engagement with the governance community and environmental, social and governance-focused investors. 

“Alexia is a highly-skilled financial professional whose expertise as an industry analyst and strong network of relationships across the investment community make her an excellent choice to lead our investor relations team,” McCarthy said in a press release. “I am confident that Alexia’s deep knowledge of the media sector, and Disney’s business in particular, make her especially well-suited to communicate our long-term strategy and financial performance to the investor community, and I am very excited to welcome her to my team.”

Quadrani was managing director and senior analyst, U.S. Media Equity Research at J.P. Morgan for the past 14 years. Her coverage included entertainment, advertising and video game stocks. She joined J.P. Morgan in 2008 through its merger with Bear Stearns, where she had served as senior managing director since 1997. She was an Institutional Investor-ranked analyst for over 20 years.

“It is an honor to be joining The Walt Disney Company and to be named to this role at such a dynamic time for the company,”  Quadrani said in a statement. “I look forward to working with Christine, [CEO] Bob Chapek and the company’s talented investor relations team, contributing the perspective I’ve developed in my many years as a media analyst. It’s an exciting time to join Disney, with many opportunities ahead in this rapidly evolving media landscape, and I look forward to helping inform the investment community’s understanding of the company’s results and progress on strategic initiatives.” ■ 

Disney Branded Television has promoted programming executive Ayo Davis as its new president, succeeding departing president Gary Marsh. 

Davis, currently executive VP for creative development and strategy for Disney Branded Television, will oversee the operations the company, including programming, strategy, development, casting, business affairs and marketing for scripted, unscripted and animation across Disney Plus, Disney Channel, Disney XD and Disney Junior.

Davis succeeds Marsh, who earlier this week announced he was leaving the position to launch a new production company. The two will work closely on a transition through the rest of the year, Disney said. 

Read Also: Disney Junior Calls on Spider-Man, Mickey Mouse to Help Drive Preschool Viewership

Davis, a 20-year Disney veteran, was promoted to her current position in November 2020 after previously serving as executive VP, talent and casting, at ABC Entertainment and Disney Plus. In her most recent position, Davis cultivated a partnership with Kerry Washington’s Simpson Street Productions to adapt Janae Marks’s book From the Desk of Zoe Washington, and attached Eva Longoria and Ben Spector’s UnbeliEVAble Entertainment to Carlos Hernandez’s Sal & Gabi Break the Universe.  She is also responsible for helping to bring in House of Secrets filmmaker Chris Columbus. Davis also collaborates closely with studios across Disney, including 20th Television and ABC Signature.

Davis will report to Disney chairman of General Entertainment Content Peter Rice, who in a statement called Davis “a focused leader” with impeccable creative instincts.

“Her creative eye for talent has made meaningful impact in front of and behind the camera, from iconic shows across our networks that were defined by their casting choices to building a roster of creator talent that will redefine family programming at Disney Branded Television,“ Rice said. ”She’s the absolute perfect person to lead the team at a time they are broadening their remit to develop more family programming across streaming and cable distribution. I’m excited to watch all she will accomplish.”

Added Davis: “I am beyond grateful to Peter Rice and Gary Marsh for their extraordinary leadership, support and mentorship. It’s a tremendous honor to continue Gary’s legacy of delighting kids and families through Disney Branded TV’s unparalleled storytelling, and it’s an amazing time for kids and family programming. I’m thrilled to continue working with my team, colleagues, our TV studios and, of course, the creators who trust us with their projects as we work to develop the next generation of beloved stories and franchises.” 

Michael Corn, president of news at Nexstar's NewsNation cable network, was accused in a lawsuit filed Wednesday of sexually assaulting an ABC News staffer when Corn was senior executive producer at ABC's Good Morning America, according to the Wall Street Journal.

Corn denied the allegations in a statement, the newspaper said.

Corn left ABC in April and joined NewsNation in May.

"We have no comment on anything that may or may not have happened prior to Mr. Corn's employment with Nexstar," a Nexstar spokesman said.

The suit, which also names ABC parent The Walt Disney Co., was filed by Kirstyn Crawford, a producer at GMA. She alleges that Corn assaulted her during a business trip in 2015. The suit also alleges Corn sexually assaulted former ABC News producer Jill McClain when McClain and Corn worked together at ABC's World News Tonight. 

According to the WSJ, ABC officials were informed about Crawford's complaints in 2017. An investigation into Corn was started this year after Crawford and McClain filed formal complaints to the network. 

Crawford is seeking unspecified damages.

In the suit, she alleges that she and Corn were covering the Academy Awards in Los Angeles. On the way back to their hotel after a party, she says Corn was intoxicated and forcibly touched her, kissing her head and rubbing her legs and telling her he wanted to help her with her career, the paper said.

When they got to the hotel, Crawford went to Corn’s room because he asked for Advil. He asked her to sit on his bed. When she did, he grabbed her arm and began kissing the top of her head, the paper said, citing the suit.

In the statement sent to the paper, Corn cited emails Crawford sent to him he claims prove the alleged incident didn't occur.

The Walt Disney Co. and ViacomCBS said they plan to hold upfront presentations for advertisers in their traditional May time slots, although this year they will be held virtually.

Last year’s in-person upfront events were canceled and replaced by digital events by the COVID-19 outbreak. The pandemic, and the recession it caused, led to upfront deals for this broadcast year not being reached until September--just before the start of the fall season. 

WarnerMedia earlier announced it will have an upfront event for its kids and family buisness on Feb. 17. A+E said it will have its upfront event on March 3. Both of those events will be virtual.

Also Read: Fox Launches Campaign, Web Portal for Ad Buyers

Disney Advertising Sales will have a unified upfront event in May that will represent its entire video portfolio. 

Disney brands represented include ABC, ABC News, Disney Channels Worldwide, Disney Digital, ESPN Networks, ESPN Plus, Freeform, FX Networks, Hulu and National Geographic Networks. 

Hulu, which had previously held an event for advertisers during the Newfronts at the Hulu Theater, will no longer have a standalone event.

Also Read: NBCU Offers Technology, Data at ‘Developer’ Meeting

Disney’s upfront will be preceded by a Disney Platform Technology Showcase on Feb. 23 for advertising clients. The event will highlight data-driven precision advertising, new ways of measuring advertising, premium ad experiences and updated transaction technology. 

NBCU recently announced a similar developer event, called One21, which will be held March 22. NBCU is also expected to have an upfront event, but it hasn’t announced its plans for that event.

On March 23 Disney will have a development event to showcase upcoming programming.

ViacomCBS confirmed that it is having an upfront event on May 19 at which all of the company’s networks will be represented.

Hulu’s original series chief believes the Walt Disney Company will continue to back his joint-venture subscription streaming platform, despite its plans to launch its own SVOD service later this year.

“Hulu is a very important strategic asset for our owners,” said Craig Erwich, senior VP of original programming, told reporters at the Television Critics Association press tour in Pasadena, Calif. Monday.

Erwich noted Hulu’s 48% year-over-year subscriber growth in 2018 to 25 million users. “You don’t get that kind of growth without the support of our ownership,” he said.

Related: TCA 2019: Hulu To Premiere 'Catch 22' in May; Releases Video Trailer

Disney is in the process of absorbing 21st Century Fox, another co-owner in Hulu, and will have a 60% ownership stake in the platform when that acquisition is completed.

The conglomerate is also in the process of launching Disney+, a subscription streaming home for movies and TV shows, which Disney CEO Bob Iger recently labeled “the biggest priority” of 2019 for the company.

Speaking during Hulu’s fourth-quarter earnings call last week, Iger said he’d be better able to lay out long term plans for Hulu once the Fox deal closes. For now, he continues to speak in broad strokes, noting Hulu’s place in Disney’s audience grand segmentation plans that not only involve Disney+, but ESPN+, as well.

“What we said when we decided to launch ESPN+ and Disney+ is that rather than creating one gigantic fat bundle of sports, general entertainment programming and family programming, we thought we'd serve the consumer better by segregating all three,” Iger said.

“Ultimately, our goal would be to use the same tech platform to make it easier for people to sign up for all three should they want to, same credit card, same username, same password, et cetera, but give the consumer the kind of choice that we think consumers are going to demand more and more in today's world,” he added. 

The Walt Disney Co. chairman and CEO Bob Iger received total compensation of $65.6 million in 2018, an 80% increase over the prior year, according to documents filed with the Securities and Exchange Commission.

The bulk of that gain came in the form of stock awards — $35.4 million in 2018 compared to about $9 million in 2017. Iger’s base salary rose 16% to $2.9 million from $2.5 million in the prior year. In addition, he received $18 million in non-equity incentive plan compensation, up from $15.2 million in the prior year.

Related: Iger: Disney Will Run Hulu With Partners in Mind

Other executives also received healthy pay boosts in 2018, including chef financial officer Christine McCarthy (32.6%) to $11.8 million; SVP general counsel and secretary Alan Braverman (24%) to $10.4 million; and chairman, direct to consumer and international Kevin Mayer (38%) to $11.6 million.

Disney agreed to purchase certain Fox assets in December 2017 for about $52.4 billion,  but was trumped by a Comcast counter offer for the properties in June. After a one month battle, Disney emerged the victor with an offer for $71.3 billion for the Fox assets, nearly $20 billion more than it had originally bid. That deal is expected to close in the first quarter.

The Walt Disney Co. and Verizon said they have reached a new distribution agreement that will stave off a potential blackout of networks including ESPN on Fios systems.

“Verizon and The Walt Disney Company have reached a broad-based distribution agreement. Details will be released in the coming days,” the companies said in a statement released Sunday morning.

The agreement would presumably include retransmission consent for ABC-owned stations in New York and Philadelphia. It would also cover Disney-owned cable networks such as Freeform and Disney Channel.

The agreement would mean Fios subscribers will get to see college bowl games and an NFL wild-card game on ESPN, in addition to news and weather on the ABC stations.

Many distribution agreements expire at the end of the year. Tribune, Nexstar and Tegna stations in some markets have agreements coming up with carriers including Charter (which might lose Tribune stations on Jan. 1), Cox and Mediacom.

With Comcast’s abandoning its pursuit of 21 Century Fox programming assets a reality, influential media analyst Craig Moffett has another suggestion for the cable giant: drop your bid for U.K. satellite company Sky, too.

Comcast said early Thursday that it would no longer pursue the Fox assets, giving The Walt Disney Co., a clear path toward completing its deal with the content company. Instead, Comcast said it would focus on purchasing Sky – which is 39% owned by Fox. Comcast already is locked in a bidding war with Fox over that asset – it bettered Fox’s $32.5 billion bid for the company on July 11 with a $34 bid just hours later. 

Comcast sees the Sky assets as a way to diversify into the growing international content and distribution markets. In announcing its first bid for Sky way back in April, Comcast chairman and CEO Brian Roberts called Sky “a great fit with Comcast.”

But Moffett, who has been a critic of Comcast’s run at the Fox programming assets in the past, is no fan of the Sky pursuit either. To Moffett, Comcast is confusing what Sky couldbecome with what it is.

“…[W]hat Sky actually is, is a satellite TV provider, with all the shortcomings that that implies (most probably technological obsolescence),” Moffett wrote in a blog post. “For what it’s worth, Sky’s growth rate is about the same as DirecTV’s was when AT&T acquired it. [Investors will recall that, at the time, AT&T fancied DirecTV to be a platform-agnostic content aggregator that could easily become the bass of a global OTT brand…but we digress].”

Related: Analyst Says Disney Could Outlast Comcast in Fox Fight 

Moffett noted that Sky has an impressive list of content assets – Premiere League Football rights, exclusives with programmers like HBO, Fox, Disney, NBCU and Showtime. But, while those deals create some protection against the increasing competitive threat from OTT and SVOD providers, they can’t be counted on to last.

Disney has already announced plans to go direct-to-consumer with some of its offerings, and HBO, recently purchased by AT&T, and CBS’s Showtime will probably do the same at some point.

On the soccer front, Facebook recently purchased Premiere League rights for Vietnam, Laos, Cambodia and Thailand, and Moffett believes it isn’t much of a stretch to think they would try the same for Western Europe once those rights come up for renewal. 

“Knowing this, if Comcast does acquire Sky, they would have to rapidly wean it from its dependence on licensed content, just as Netflix had to begin doing five or so years ago when it became clear that they faced the same crisis,” Moffett wrote.

Moffett has always thought that the man driver for Comcast’s bids for Fox programming was the TV and movie studio. Distribution is all well and good, but to Moffett, Comcast saw that producing more compelling content would determine the winners in the battle for consumer entertainment dollars. Now, with the studio out of the picture, Comcast will instead have to ramp up production at its existing Universal Studios. But there’s some risk involved in that too.

“If they can’t manage to ramp up their studio slate fast enough, they will be left with what is at best a declining distribution platform that will serve as a drag on growth of whatever it is they try to build in its place,” Moffett wrote. “And even if they can ramp the production slate fast enough (with only their Universal Studios) they will have to spend like drunken sailors to do it.”

And Comcast should be careful what it wishes for. Moffett notes that Netflix has a lot of subscribers – about 130 million globally, at last count – that are losing a lot of money.

"Would Comcast ever be ascribed anything remotely like a Netflix –like valuation if they were to achieve something like Netflix-like metrics?” Moffett asked. “We (strongly) doubt it.”

Moffett also dismisses the notion that Comcast’s pursuit of Sky – or for Fox programming assets for that matter – was a reflection on its displeasure with the distribution business.

“Instead, they are a commentary on Comcast’s view of NBCU,” Moffett wrote. “Comcast rightly believes that being a player in media will require enormous scale. Now that they own NBCU, they’ve got to feed the beast.”

Comcast could sell its programming unit and let someone else deal wit the scale issue, but Moffett and most other analysts don’t believe that will ever be considered.

And Moffett commends Comcast for its forward-looking attitude in what is an increasingly scary future.

“The problem isn’t with the vision,” Moffett wrote. “It’s with the asset (Sky) they are trying to shoehorn into that vision. And with the expectation that shareholders will be rewarded for their pursuit of that vision, even if they achieve it.” 

Comcast investors were apparently pleased that the cable operator has dropped its months long pursuit of 21 Century Fox assets, driving its shares up by more than 3% on Thursday.

Comcast stock went as high as $35.29 each on July 19, up 3.7% or $1.25 per share. It was the highest point for Comcast stock since March. The stock was trading at $35.19 each (up 3.2%) at about 10:26 a.m. Thursday.

Shares of The Walt Disney Co. also rose sharply on July 19 – up as high as $114 (3% or $3.31 per share) in early trading. The stock was priced at $113.75 (up 2.7%) at 10:26 a.m. July 19.

Now that the bidding war for its programming assets is over – and the battle for British satellite giant Sky is heating up – 21st Century Fox shares dipped about 2% (91 cents each) to $45.77 in early trading Thursday. The stock rose slightly to $45.82 (down 1.9%) at 10:26 a.m. July 19.

Related: The Hunt is On

Comcast ended its months-long bidding war with Disney earlier Thursday, saying it would drop its pursuit of the Fox assets and focus its attention on Sky. 

Fox owns a 39% interest in Sky and has been trying to consolidate the asset, only to be outbid by Comcast. With Comcast's attention fully focused on the U.K. satellite company, the potential for that ongoing battle to heat up has increased. 

AT&T chair and CEO Randall Stephenson, a day after the U.S. Dept. of Justice said it would appeal a federal court decision that helped clear the path to its merger with Time Warner Inc., told CNBC Friday morning that the DOJ’s action could affect another potential mega-media merger: Comcast’s pursuit of 21 Century Fox assets.

Related: DOJ to Appeal AT&T-Time Warner Merger 

Comcast was expected to raise the ante again for certain Fox programming and studio assets pledged to The Walt Disney Co. Comcast had outbid Disney’s original $52.4 billion equity offer for the assets in June with a $65 billion all-cash proposal, only to be bested by another cash and stock offer from Disney worth $71.3 billion. The DOJ approved the Disney deal on June 27. 

Speaking to CNBC’s Squawk Box on Friday from the Allen & Co. conference in Sun Valley, Idaho, Stephenson said the DOJ’s plans to appeal the Time Warner purchase came as little surprise, adding that it probably isn’t great news for Comcast’s pursuit of Fox.

“[It] probably can’t help it,” Stephenson told CNBC, according to a transcript. Stephenson said he didn’t want to speculate on the government’s motives for appealing his merger, but said it could affect the Comcast-Fox “process.”

Related: AT&T, Time Warner Cleared to Merge 

“You’re in a situation where two entities are bidding for an asset, and this kind of action can obviously influence the outcome of those actions,” Stephenson said. “But who knows whether that’s behind us.”

The AT&T chief stressed that the appeal process – which he speculated could take five-to-six months to complete -- will have no effect on the way AT&T and Warner Media run their businesses.

“This changes nothing,” Stephenson said. “This changes nothing we’ll be doing over the next 30 days or the next 12 months. We’re about executing our plan. We think the likelihood of this thing being reversed and overturned is really remote. It’s a very narrow path that would have to be traveled to get this thing reversed in any way. So we’re about executing our plan. The merger is closed. We own Time Warner.”

Related: AT&T Completes Time Warner Purchase 

Stephenson said as part of the original agreement, AT&T would run Warner Media separately and independently, and the company has no intention of changing that.

“I mean, when you have content players who are both suppliers and customers, you just have an obligation to treat them that way anyway,” Stephenson said. “So this changes nothing about how we operate the business. It changes nothing about products we will launch. It changes nothing about other M&A we need to do like Appnexus.”

Related: AT&T to Acquire AppNexus as Start of TV Ad Marketplace

And while the AT&T chief said the appeal could pose some problems for Comcast-Fox, he doesn’t see the same chilling effect on other potential mergers.

“If [I] were a CEO looking at media acquisitions and deals, I don’t think I would be looking at them today any differently than I did yesterday,” Stephenson said. “I think this is a process that will play itself out. But I think there is such a slim chance of this thing being altered in some way that it wouldn’t affect my thinking much at all.

But he added that most other companies shouldn’t have been looking to the AT&T-Time Warner ruling as a regulatory template in the first place, because Judge Leon’s ruling was so specific to that transaction.

AT&T has come under fire lately over how it would run Warner Media, specifically a Town Hall meeting with HBO employees where Warner Media chief John Stankey appeared to want the premium network to be more like Netflix. Stephenson said that Stankey’s message of increasing engagement is a strong one. 

“At the end of the day that’s what this is all about, engaging the consumer,” Stephenson said. “Because the more engagement you have, the more opportunity you have to create value.”

More engagement could mean “pumping more content into HBO,” but it also means spreading it across AT&T’s other digital properties like DirecTV Now, WatchTV and online sites like CNN.com.

Still, the AT&T chief said the company is aware of the potential for culture clashes between Warner and other AT&T units, but added he wasn’t concerned about it.

“I’m conscious of it and we’re being very, very careful and mindful of that.” Stephenson said. “The way we’ve organized the business, it will be run separately, very independently. It’s important that we preserve the culture.” 

A British regulator has approved 21st Century Fox’s proposed acquisition of Sky as the bidding war between Fox and Comcast over the European satellite broadcaster escalated.

With the approval of the U.K. Secretary of State for Digital, Culture, Media and Sports, Fox said in a statement that all regulatory preconditions to its acquisition have now been satisfied and waived. A committee of independent Sky directors waived the preconditions on their merger agreement, Fox said.

Fox is looking to acquire the 61% of Sky it does not already own.

Comcast might still be standing in the way. After the close of trading on Wednesday (July 11), the cable company raised its bid for Sky to 14.75 British pounds sterling, or $34 billion.

That topped Fox’s latest bid, made Wednesday morning, for 14 pounds per share, or $32.5 billion. Fox’s new bid was 30% higher than its previous offer.

The battle for British satellite giant Sky just got hotter as 21 Century Fox upped its bid for the company to $32.5 billion, besting a rival offer for the company from Comcast and clearly putting the ball in the cable operator’s court.

Fox was widely expected to increase its offer for Sky after Comcast made a $31 billion unsolicited bid for the company in April. In making its latest offer, Fox said the all-cash deal values Sky at £14 per share (about $18.57 per share) and bests Comcast’s £12.50 per share bid by 12%.

Related: Comcast Formalizes Sky Offer 

In a statement, Fox said the offer represents an 82.1% premium to Sky’s closing price on Dec. 6, 2016, when it made its original offer to purchase the 61% of Sky it didn’t already own. The deal is conditioned on a positive ruling on the purchase from the U.K. Secretary of State, who has said he will make a decision on the deal on July 12.

Fox was widely expected to make the higher offer. 

Related: Fox Adding Ammo to Sky Battle 

Sky is expected to be part of a separate deal between Fox and The Walt Disney Co., for certain programming assets. Disney has already agreed to purchase Sky News – which had been a sticking point with regulators – and will assume control of the satellite company once its larger deal is closed.

Related: Disney Pledge to Buy Sky News Unit Clears Regulatory Path for Fox Consolidation 

“As the founding shareholder of Sky, we have remained deeply committed to bringing these two organizations together to create a world-class business positioned to deliver the very best entertainment experiences well into the future,” Fox said in a statement. “We strongly believe that a combined 21CF and Sky will be a powerful driver for the continued growth and vibrancy of the UK and broader global creative industries. The enhanced scale and capabilities of the combination will enrich Sky’s ability to continue on its mission for years to come, especially at a time of dynamic change in our industry. This transformative transaction will position Sky so that it can continue to compete within an environment that now includes some of the largest companies in the world, but none of whom have demonstrated the same local depth of investment and commitment to the UK and to Europe.”

The Walt Disney Co. has put studio executive Ricky Strauss in charge of content and marketing for the much-anticipated Disney-branded direct-to-consumer subscription video-on-demand service set to launch late next year.

Strauss, who had been president of marketing for The Walt Disney Studios, will be president, content, for the SVOD service and will report to Kevin Mayer, chair, Walt Disney Direct-to-Consumer and International.

Related: Disney Reorganizes to Create Direct-to-Consumer Segment

The new DTC is a key initiative for Disney, which is looking to compete with Netflix in the streaming space. Acquiring content for DTC products is a driver behind Disney’s effort to acquire assets from 21st Century Fox, including its TV and movie studios.

Strauss will be in charge of developing the strategic content vision for the service, overseeing development of the service's original programming slate, production partnerships and content acquisitions, Disney said.

Original content for the service will come from The Walt Disney Studios, Disney-ABC Television Group, Disney Digital Media, Pixar Animation, Marvel Entertainment and Lucasfilm.

Related: Iger Says Disney DTC App Will Include Star Wars, Marvel Franchises

"Ricky’s vast knowledge of content production and marketing combined with an astute awareness of how audiences connect with the Disney brand is unmatched,” said Mayer. “His creativity, passion and the deep industry relationships he has cultivated over many years will surely strengthen our ability to successfully launch and grow our upcoming SVOD product into an unparalleled content experience and the must-have streaming service for families and fans of The Walt Disney Company’s high-quality entertainment.”

Agnes Chu will continue in a key leadership position as senior VP of content for the service, reporting to Strauss.

Strauss will also be responsible for all facets of content marketing for the service, while Michael Paull, president, Disney Streaming Services, will be responsible for product, technology, distribution, customer acquisition, and lifecycle marketing.

“It has been such a privilege to be a part of The Walt Disney Studios team these past six years in a role that provided me the opportunity to work with incredibly talented individuals on amazing projects that go beyond anything I could have ever imagined,” said Strauss. “It is with great anticipation that I begin this next chapter with Disney’s new Direct-to-Consumer and International segment, under Kevin’s leadership. I look forward to collaborating with the many talented content creators around the Company to expand the exceptional collection of assets that will make up the future Disney-branded direct-to-consumer streaming service.”

Comcast’s $65 Billion bid for certain 21st Century Fox assets wasn’t the “shock and awe” offer that many were expecting, but it solidified what everyone in the industry already kind of knew: Brian Roberts is dead serious about adding content scale.

Comcast’s chairman and CEO had in the past expressed interest in the Fox assets — cable channels FX, FXX and National Geographic; TV and movie production studio 20th Century Fox; 21 regional sports channels; and Fox’s 39% interest in U.K. satellite company Sky and 30% interest in online video pioneer Hulu.

In December, Comcast offered Fox about $34 per share in stock, a bid that was higher than the ultimate winner, The Walt Disney Co., but was rejected because of regulatory concerns and the lack of a breakup fee. In its new $35-per-share deal offered up June 14, Comcast has matched Disney’s $2.5 billion breakup fee and has offered to pay Fox’s $1.5 billion termination obligation, should it scuttle the Disney deal.

Comcast telegraphed in May that it was in the “advanced stages” of making a formal all-cash offer. The bid is expected to touch off a potentially bloody bidding war with Disney, which in December announced a deal valued at about $55 billion (not including assumed debt) for the same assets.

Disney has so far been silent on the Comcast offer, and Fox said last Wednesday (June 13) that its board of directors has received the proposal and will review it. The company has not decided whether it will need to cancel the July 10 special shareholders meeting to vote on the Disney proposal. That could perhaps be decided at a previously scheduled meeting of the Fox board of directors on June 20.

Related: Disney, Fox Set July 10 Special Meeting

While the Comcast bid is about 20% more than the Disney offer — but still short of the 25% or higher premium many analysts expected — Pivotal Research Group CEO and senior media and communications analyst Jeff Wlodarczak said a knockout offer would have probably driven Comcast stock into the cellar, and besides, Roberts may believe that Disney won’t be as aggressive as everyone thinks. Comcast shares were already down about 20% this year, mainly because investors feared Comcast and Roberts would do just what they did on Wednesday.

“Sentiment in cable is god awful and massively overdone in my view, which sets the table for significant short squeezes in both Comcast and Charter and Disney,” Wlodarczak  said. “Investors are pricing these names as if the world is falling apart, and Comcast is doing something incredibly stupid, which is simply not the case. Even if Comcast were to pay materially more — say $15 billion — the stock is still dirt cheap and there is logic to a deal.”

Comcast stock actually rose 4.6% ($1.50 each) to $33.82 per share on June 14, signaling that perhaps that sentiment is easing a bit.

Both sides are expected to fight hard for the assets. Disney chairman and CEO Bob Iger has said the Fox deal is a critical piece of his company’s overall direct-to-consumer strategy, giving the content giant more compelling programming and reuniting film properties in the vastly popular and profitable Star Wars franchise (Fox owns Episode IV: A New Hope, the initial 1977 film) and the Marvel Comics universe (Fox holds the film and TV rights to the X-Men and other characters). Iger is not one to back down from a fight, and both sides have the resources to sweeten their offers.

“Release the hounds. The Fox chase is on,” wrote MoffettNathanson principal and senior analyst Craig Moffett in a blog post.

In a conference call with analysts to announce the deal, Comcast focused a lot on its international aspects— it would boost international revenue from 9% of total sales to 27% — but that also could have been for regulators. While the business is truly becoming global, Roberts’s brief explanation of the state of the pay TV industry probably showed his own mindset the best. “We firmly believe that the truly great media companies of the next century will be large integrated entities with multiple growth engines across a wide swath of the global entertainment industry,” Roberts said.

NBCUniversal CEO Steve Burke, under whose purview the Fox assets, if acquired, would fall, said the deal reflects the changing landscape and Comcast’s willingness and ability to adjust to it.

“One thing we know for certain is that more video is being consumed across more platforms than ever before,” Burke said. “We think that will continue for years to come.”

Burke believes not only will the best companies create and broadly distribute their own content, they will sell it to a global audience. “The Fox assets will make us stronger,” he said.

On the conference call after the deal was announced, Roberts praised Fox’s ruling Murdoch family for its excellent stewardship of the assets, comparing Rupert Murdoch’s vision to that of his own father, the late Ralph Roberts, with both building media empires essentially from scratch. “We are, in our minds, the right buyer,” he said on last Wednesday night’s call.

Related: Murdoch Calls Disney Deal a ‘Momentous Occasion’

Both Comcast and Fox have grown their businesses by acquisition, but have taken slightly different tacks. Murdoch is famous for bidding way too much for content assets — like his offer for National Football League rights in the 1990s, which was $100 million higher than the next bidder but put the Fox broadcast network on the map, and more recently buying The Wall Street Journal at a 67% premium. Roberts has taken a more careful approach, seeking out troubled companies that could be snapped up for bargains and turned around quickly like AT&T Broadband and NBC Universal.

Roberts touted those past deals as proof that Comcast knows how to integrate large purchases. But AT&T Broadband was in trouble and managed poorly — the telco had concentrated on phone service while its video operation dwindled. And NBCU had a disinterested owner (GE), a fourth place broadcast network in a four-player field, and a slew of cable networks that were basically neglected. There was a lot of upside for an owner that knew had to run a pay TV business, and Comcast took full advantage.

That philosophy has served Comcast well. Since its IPO in 1972, the average return for Comcast shareholders has been 17.1% per year, Roberts said, far outpacing the S&P 500 Index. To put it more bluntly, $7,000 invested in Comcast stock in 1972 would be worth about $10 million.

“This is our formula, and I’m proud of our 45-year track record,” Roberts said.

But the Fox assets are not in trouble. There aren’t as many clear, major improvements that Comcast can make to boost returns as it did in its other mega-deals.

Related: Roberts Says Comcast Is the ‘Right Buyer’ for Fox

On the conference call, Burke acknowledged the Fox assets were different, but said there is ample room to grow. “[I]t’s more about complementarity; it’s about the fact that we’re very strong in distribution and content in the United States and not as strong in places like India and Europe,” he said.

But to service its new debt, Comcast will need big returns. If its current bid is accepted, the combined company’s overall leverage would balloon to about $170 billion, or about 4.25 times forward-looking cash flow, per Moody’s Investor’s Service. That is about twice its current leverage of 2.75 times, and could jeopardize its investment-grade rating — i.e., its ability to borrow cash cheaply.

The combined entities are expected to have enough free cash flow to repay debt maturities as they come due, which Moody’s said was “very important given the amount of outstanding debt, secular pressures on linear pay TV and slowing cable industry growth.” But the credit rating agency added Comcast’s willingness to increase leverage so much is “a major shift in financial policy.”

Roberts called the extra leverage as a result of the deal “temporary,” adding that his best answer to the debt service question is the performance of the overall business.

“We have a business plan and a momentum,” Roberts said. “With a changing world, we make adjustments.”

Analysts are split as to who may emerge victorious in this modern-day Fox hunt. Greenfield believes Comcast, smarting after backing off its bid for Disney in 2004 and abandoning its pursuit of Time Warner Cable in 2015, doesn’t want to lose a third time and will be very aggressive. Moffett believes if Disney can put together an attractive package of cash and stock, it could end up the victor. Wlodarczak believes Comcast needs Fox more than Disney, and therefore would do whatever it takes to obtain the assets.

But Moffett added that no matter which suitor comes up with the highest bid, there is only one true winner in the deal. “It’s good to be Fox,” he wrote.

The British government is allowing 21st Century Fox to acquire satellite broadcaster Sky — as long as Fox sells Sky News.

21st Century Fox already owns 39% of Sky, and its $25 billion bid to buy the remaining stake has been held up by a long government review to determine if Fox would be a fit owner for Sky.

The Walt Disney Co., which has agreed to buy most of Fox’s assets, has said it is interested in buying Sky News.

Related: Fox Offers to Sell Sky News to Disney to Satisfy Regulators

But Comcast has weighed in with a bigger bid for Sky and has said it is preparing a richer bid for the other Fox assets, which include its entertainment cable networks and movie and television studios.

Related: Comcast’s Manifest Destiny

Fox has been trying to convince British regulators to let it buy Sky, including Sky News, but Matt Hancock, the U.K. culture secretary, said owning Sky would give Fox and Rupert Murdoch too much control over the British media.

Hancock told Parliament Sky News could be sold to Disney or to another buyer, as long as it remains viable

"I need to be confident that the final undertakings ensure that Sky News remains financially viable over the long-term; is able to operate as a major U.K.-based news provider; and is able to take its editorial decisions independently, free from any potential outside influence,” Hancock said in his report to Parliament.

The Walt Disney Co. is reportedly lining up banks to provide a substantial cash boost to its offer for 21st Century Fox assets it previously agreed to purchase, in an effort to best any competing bids from Comcast, CNBC’s David Faber said Tuesday (May 29).

Citing sources familiar with the company, Faber said on CNBC’s The Faber Report  that Disney is prepared to add “significant cash” to its all-stock bid for the assets, currently valued at about $68 billion.

Comcast made public its intentions for the Fox assets, issuing a formal statement May 23 that is considering an all-cash offer that would be superior to the Disney bid. While Comcast did not specify how big that bid would be, some analysts have speculated it could be as much as $10 billion more than the Disney offer. 

But that bid apparently hinges on the outcome of AT&T’s proposed $108.7 billion takeover of Time Warner Inc. That deal, which the U.S. Dept. of Justice sued to block in November, is expected to receive a ruling from U.S. District Court Judge Richard Leon on June 12. If the deal is approved, and most analysts expect it will, Comcast is anticipated to make its offer shortly after.

Fox agreed in December to sell its cable channels FX, FXX, National Geographic; its movie and TV production studios 20 Century Fox, 21 regional sports networks, its 30% interest in Hulu and its 39% interest in British satellite TV company Sky to Disney in a deal valued at $66.1 billion at the time. Fox will keep its broadcast network, as well as its cable channels Fox News Channel, Fox Business Network and sports networks FS 1, FS 2 and the Big Ten Network. In April, Comcast made a formal offer for all of Sky for $31 billion. Sky is still evaluating the offer although British regulators said earlier this month they would likely have no difficulty in approving a deal.      

With its decision to go public with its heretofore unmentioned desire for 21st Century Fox assets currently betrothed to the The Walt Disney Co., Comcast appears to be gearing up for an epic battle that hearkens back to the old media mogul days, when oversized personalities like Sumner Redstone, Barry Diller and John Malone duked it out for control of media properties.

In a statement spurred in part by public filings by Disney and Fox for their upcoming shareholders meetings, Comcast said it was “considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney.”

With that, Comcast took off the gloves, making it clear that it was not only preparing for battle, it was more than ready. It closed its terse statement by stating while no decision had been made “at this point, the work to finance the all-cash offer and make the key regulatory filings is well advanced.”

In other words: Bring it on.

Throwback Move

The media landscape is littered with tales of bare-knuckle brawls between entertainment titans. And the current love triangle that is Comcast-Disney- Fox has jogged some memories back to 1994, when three epic media personalities — Paramount Communications chief Martin Davis, Viacom chairman Sumner Redstone and QVC chief Barry Diller — battled publicly over the movie studio.

Diller, who had worked at Paramount earlier in his career, had been rumored to be interested in making a deal for the studio, but had pulled back at the last minute, according to a 1994 article in Vanity Fair. In that piece, Diller had lunch with Davis at Paramount’s private dining room in Manhattan, deflecting the Paramount CEO’s fears that he was considering a bid for the studio. Two months later, Paramount announced a deal with Viacom, valued at about $8.2 billion. Shortly after, backed by then Tele-Communications Inc. chairman John Malone, Diller launched a hostile bid for the studio for $9.5 billion.

What followed was a five-month bloody battle between the moguls involving lawsuits, poison pills and a lot of finger-pointing. In the end, Viacom emerged the victor with a $10 billion bid. It is unlikely that Comcast will get off that cheaply this time.

MoffettNathanson senior media analyst Michael Nathanson has estimated that Comcast would likely bid about $10 billion more than Disney for the Fox assets. That, he said in a note to clients, is something Disney can easily match.

Nathanson estimated that Disney’s current offer for the Fox assets is valued at about $68 billion, $54 billion in equity and $14 billion in assumed debt. Assuming that Comcast would offer about the same as it did before — it was rejected in the early rounds of bidding because of potential regulatory concerns and the Murdoch family’s distaste for Comcast stock — its cash bid would be valued at about $78 billion in total ($64 billion in equity and $14 billion in assumed debt), according to Nathanson. “We would expect Disney to match that higher bid with $10 billion in cash added in to its existing deal,” Nathanson wrote.

Nathanson has said Iger is determined to win the Fox assets, and believes the Disney chief has “never backed down from making the right long-term strategic moves for his company because of price.”

Comcast CEO Brian Roberts, the veteran of many mega-deals ranging from industry-defining acquisitions like AT&T Broadband in 2001 and NBCUniversal in 2011 to smaller content buys like DreamWorks Animation, is no stranger to asset battles. But he has preferred to take the high road in most of his transactional endeavors. At the same time, Comcast investors appeared spooked by the company’s interest in Fox, with some interpreting it as an indication that the cable company has lost faith in its U.S. distribution business.

Although Comcast has denied that — even as it made a $31 billion formal offer for U.K. satellite company Sky, of which Fox owns a 39% stake — shares in the cable firm have plunged about 20% this year. The public admission of its interest in Fox hasn’t helped either, as Comcast shares were down about 3% since it made the announcement.

That decline has come just as Netflix, once thought of as the cable killer, has risen. Last week, Netflix’s market capitalization briefly touched $153 billion, passing Disney ($152.2 billion) and Comcast ($145.5 billion) for the first time, before settling for a tie with the Mouse House, closing May 24 with a market cap of about $152 billion. Fueling those gains has been an 82% surge in Netflix’s share price since December.

Disney’s Big War Chest

Disney, which has low leverage — about 1.2 times forward-looking cash flow — and $9 billion in free cash flow, can afford a bidding war with Comcast. Nathanson estimated borrowing the additional $10 billion needed to compete with the Comcast bid would increase its leverage ratio to about 1.6 times at the end of 2020, not a major concern for ratings agencies.

Comcast, on the other hand, would see its debt balloon to $164 billion in a Fox deal, according to Moody’s Investors Service. In a note, it said a Fox bid, estimated at about $60 billion for the equity, would drive Comcast’s overall leverage past 4.3 times cash flow, endangering its investment-grade debt rating.

Moody’s placed Comcast’s A3 debt ratings on review for possible downgrade last week, adding that a Fox bid would make it the second highest leveraged media company behind AT&T-Time Warner. Earlier, Moody’s had warned that Comcast’s willingness to increase its debt load that much represents a big departure from past practices and stated commitments and creates “significant doubts for the future.”

But both companies see Fox as an integral part of that future and are expected to bid hard and high. Sanford Bernstein analyst Todd Juenger in a report earlier this month said Disney and Comcast believe the business has evolved to a point where there will be only a few global scale players and Fox is “the seminal defining point,” in determining who they will be.

“And therefore, we think both Comcast and Disney are likely to pay a high price,” Juenger wrote.

After reviewing Securities and Exchange Commission documents, Comcast confirmed what the rest of us have been expecting all along — it is seriously considering a competing bid for 21st Century Fox assets currently pledged to The Walt Disney Co.

Comcast has already made a competing bid for British satellite giant Sky — 39% owned by Fox and also part of the Disney deal — and most analysts expected the cable giant to make a play for the other Fox assets in the Disney deal. But most had expected Comcast to wait for a favorable ruling in the pending AT&T-Time Warner merger before pulling the trigger on a bid. Apparently Comcast is either very confident that deal will be approved or is fearful another player may enter the fray.

Related: With Rival Bid, Comcast Complicates the Fox Hunt [subscription required]

In a statement issued early Wednesday, Comcast confirmed that as Fox and Disney shareholders ready to vote on their deal, the cable company is “considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney (which do not include the Fox News Channel, Fox Business Network, Fox Broadcasting Company and certain other assets). Any offer for Fox would be all-cash and at a premium to the value of the current all-share offer from Disney.”

The Disney deal, including debt, is valued at $66.1 billion. No word on whether an all cash deal from Comcast would include its already on the table $31 billion cash offer for Sky, or if that latter deal will be separate. UK regulators have already hinted that a Comcast takeover of the satellite company would probably receive little resistance.

Related: U.K. Culture Secretary Says Unlikely to Block Comcast-Sky

Comcast said that it still could decide to not make a bid, but also seemed to confirm past reports that it was lining up banks for a Fox offer.

“While no final decision has been made, at this point the work to finance the all-cash offer and make the key regulatory filings is well advanced,” Comcast said

Cable investors have a new obsession when it comes to battles between networks and distributors — determining which one will shoot first.

Comcast was the first to flash its weapons by lining up banks for a hostile run at 21st Century Fox assets currently pledged to The Walt Disney Co. Comcast, according to reports, is readying an all-cash offer for the Fox assets, which include cable channels FX, FXX, National Geographic, the 20th Century Fox TV and movie studio, 22 regional sports networks and U.K. satellite assets. 

Comcast is reportedly set to fork over about $60 billion in cash for the Fox assets, above Disney’s $52.4 billion all-stock proposal. When about $13.7 billion in assumed debt is factored in, the Comcast bid could be worth about $74 billion, a 12% premium to Disney’s $66.1 billion offer.

Whether Comcast is serious or is simply trying to tweak Disney’s nose by forcing it to pay more for the Fox assets — it also has made a separate $31 billion offer for U.K. satellite TV company Sky, 39% of which is owned by Fox — isn’t clear. 

Related: Comcast Bid May Spark  War for Sky

The Comcast bid is contingent on a favorable outcome to the government’s efforts to block the AT&T-Time Warner merger. Most analysts believe that deal will go through, and a ruling in the antitrust court case around that merger is expected June 12. Meanwhile, Comcast has some regulatory baggage of its own.

As the largest U.S. cable operator with 22 million subscribers, Comcast already owns a movie studio (Universal), broadcaster NBC and about 13 cable networks — including USA Network, Bravo and Syfy — through NBCUniversal. Adding Fox’s channels and studios could prove too much for the government to bear. And while some have said the government honed in on the Time Warner deal because its news network, CNN, is critical of President Donald Trump, NBC is the network that said, “You’re fired” to the president on its The Apprentice reality show in 2015. Many observers have noted that there is little love for the programmer, or desire to make its path easier, in Washington.

Unquestionable Growth

In a note to clients, MoffettNathanson senior research analyst Michael Nathanson noted that Disney executives didn’t take a single question about affiliate fees or subscriber trends on the company’s fiscal second-quarter earnings call May 8, normally the main topic of conversation in such events. That was a shame, because Disney’s numbers were good — ESPN’s affiliate-fee growth of 5.2% was its best such mark in two years, and subscriber declines appear to be slowing.

“The declines this quarter were less than the declines we’ve seen in the prior two quarters,” Disney CEO Bob Iger told CNBC before the earnings call, adding that it is mainly due to growth with virtual multichannel video programming distributors. “That’s great for a number of reasons because they carry all of our channels and it’s a consumer-friendly proposition. The growth of those is offsetting, to some extent, the losses on the more traditional platforms.”

Fox, which reported earnings on May 9, also deflected any questions about the Disney deal.

“We are committed to our agreement with Disney and are working through the conditions to bring it to a closing,” Fox co-executive chairman Lachlan Murdoch said on its fiscal third-quarter conference call with analysts. “In addition, our directors are of course aware of their fiduciary duties on behalf of all shareholders.”

In a note to clients, Nathanson wrote that he too expects the Disney-Fox deal to be completed, adding that Iger has never backed away from what he considered to be the right move simply over price. “From the moment he bought Pixar to building Shanghai Disney Resort, Iger has invested whatever it takes to do what is strategically right in the long run,” Nathanson wrote, adding that with leverage low at 1.2 times cash flow and free cash flow of nearly $9 billion, Disney has the resources to raise its bid.

Sanford Bernstein media analyst Todd Juenger wrote in a note to clients that he expects Comcast to bid and bid hard for the Fox assets, adding that it is becoming increasingly apparent that Disney, Fox and Comcast believe the future of the content business lies in increasing scale.

“We think Disney and Comcast increasingly view Fox as the seminal defining point, and this the moment in time, in determining which company ascends to that role,” Juenger wrote. “And therefore, we think both Comcast and Disney are likely to pay a high price.”

But not everyone is convinced Disney is up for a fight. BTIG media analyst Rich Greenfield, a frequent critic of Disney, wondered in a blog post why the entertainment giant continued to repurchase its stock if it was expecting a bidding war with Comcast.

Best Bids

“Disney may need to dramatically sweeten its offer for Fox with stock or part/ all cash and make an all-cash offer for Sky to fend off Comcast and likely needs to invest far more heavily in its consumer offerings,” Greenfield wrote. “We wonder if Disney is really prepared for a bidding war against Comcast.”

For Fox, a Comcast bid would present different problems. Comcast was involved in the initial bidding process with Disney last year, and even submitted a higher offer, only to be rejected. According to reports, Fox chief Rupert Murdoch preferred Disney shares to Comcast stock — he believed it was less volatile — and wanted an all-stock deal to lessen the tax burden of the sale. An all-cash offer from Comcast would be constructed solely to appeal to shareholders outside of the Murdoch family, which some observers believe puts the Murdochs in a tough position.

At Kagan, a unit of S&P Global Market Intelligence, analyst Derek Baine said if Comcast goes through with a hostile bid, “Fox management will be in a pickle.” He added that rejecting a higher all-cash bid just to get a better tax profile would open the programmer to “a flurry of shareholder lawsuits, only further serving to distract management in the midst of a major restructuring of its assets.”

Pictured: Disney's The Fox Hunt (1938)

Whether Comcast makes a formal offer for British satellite giant Sky or decides to find another means to acquire scale could all come down to the MSO's stock price, MoffettNathanson principal and senior analyst Craig Moffett said in a note to clients Wednesday.

Moffett said it has been about 30 days since Comcast made public its intention to buy Sky for $31 billion – it has yet to make a formal offer for the company – and since then Comcast's stock has fallen about 16.6%. The analyst likened the current situation to Comcast’s 2004 unsolicited bid for The Walt Disney Co., which was withdrawn after about 10 weeks when the MSO's stock plunged as investors made clear their displeasure with the deal.

The current state of Comcast stock could in part be attributed to the Sky bid. Some investors see it as an indication that Comcast has lost faith in the U.S. cable business, and many see the Sky move as a precursor to a bid for the 21st Century Fox assets currently betrothed to Disney.

And then there is the overall erosion of cable fundamentals. Continued video customer declines – Moffett predicted Comcast will lose 309,000 video customers in 2018 (more than double what it lost in 2017) – increased pressure from cord-cutters and over-the-top services and slowing broadband growth have weighed on the entire sector. But Moffett predicts that if the stock price declines continue much longer, Comcast may be forced to walk away.

Clearly there are differences between the Sky and Disney bids. Comcast’s 2004 $59.9 billion bid for Disney was an all-stock offer, and the further Comcast’s stock fell, the more expensive it became for Comcast shareholders. The Sky bid is an all-cash deal, and therefore the stock decline may not matter in the context of the transaction.

To move ahead with the deal, Comcast would have to make a formal offer to U.K. regulators, but isn't required to do so until seven days after Sky wins U.K. government approval for Fox's own bid to acquire the full company (Fox already owns 39%) and holds its own shareholder meeting to vote on the deal. That could take up to two months to complete, but Moffett believes Comcast may make a final decision before then.

“[W]e would argue that Comcast’s sharp selloff could well lead management to reconsider withdrawing from its pursuit of both Fox and Sky, much as they did in 2004,” Moffett wrote. “We ourselves have pointed to resolution of the AT&T-Time Warner case as a potential catalyst for Comcast’s final decision, but the decline in Comcast’s share could trigger a decision even earlier than that.”

Comcast stock was up slightly (27 cents, or 0.8%) to $33.26 in early trading Wednesday.

Former ESPN president John Skipper said he suddenly left the sports network late last year because he was using cocaine and was being extorted by a drug supplier.

In an interview in The Hollywood Reporter, Skipper said that, facing exposure, he told his family and his boss, The Walt Disney Co. CEO Bob Iger, about his addiction.

That conversation led to his leaving ESPN.

Related: Skipper Resigns as ESPN President

“They threatened me, and I understood immediately that threat put me and my family at risk, and this exposure would put my professional life at risk as well," Skipper said. "I foreclosed that possibility by disclosing the details to my family, and then when I discussed it with Bob, he and I agreed that I had placed the company in an untenable position and as a result, I should resign.”

Skipper’s resignation came as a shock to ESPN staffers. Just days before, he’d addressed employees, outlining his plans for pushing the company into the future.

The finality of the resignation on Dec. 18 hit him hard, he said.

"That’s the day, of course, that there is no turning back; it’s done, it’s gone, it’s public," Skipper said. "It was miserable. I spent it mostly by myself in New York City. I cry sentimentally at movies, but I never cry personally. That’s the only day that I cried. And I cried because I realized the profundity of what I’d done to myself, to my family, and that I’d given up the best job in sports on the planet."

Earlier this month, Disney said that ESPN’s new president would be Disney exec Jimmy Pitaro. Skipper was asked what he thought of the announcement.

“Yeah, of course it has a certain pang to it," he said. "Because it has a sort of definitive finality, that OK, somebody new is going to be in charge. The good news is that Jimmy Pitaro is a good guy; I like Jimmy very much. He’s a good, smart executive. His style will work at ESPN. I wish him well, and (laughs) I hope he does better than the last guy!”

The Walt Disney Co. on Monday (March 5) named James Pitaro as president of ESPN and co-chair Disney Media Networks.

Pitaro has been chair of Disney Consumer Products and Interactive Media since 2016.

Related: CNN’s Zucker a Candidate for ESPN Job: Reports

He replaces John Skipper, who stepped down last year because of personal issues. Since Skipper left, former ESPN chair George Bodenheimer has been running the sports network as acting chairman.

Though a leader in the sports business and a top rated network, ESPN has been hurt by the decline in pay-tv subscribers because it takes in the most revenue per subscriber of any cable network. At the same time as its distribution revenue growth has been throttled by cord-cutting, its costs for sports programming have been rising, putting pressure on profits.

ESPN is getting ready to launch a new app that will include ESPN Plus, a new subscription product that will offer live sporting events, origianl content and a library of on-demand programming.

Related | broadcastingcable.com: ESPN Plus Service Will Cost $4.99 Per Month

“As a passionate and lifelong sports fan, I am honored to be joining the ESPN team during such a pivotal time in its storied history,” Pitaro said. “The appetite for quality sports content across platforms has never been greater, and I am looking forward to working with the talented ESPN team as we continue to redefine the future fan experience.”

Pitaro’s appointment is effective immediately, and new leadership for Disney’s consumer products and interactive businesses will be named at a later date.

Before joining Disney, Pitaro served as head of Yahoo Media, where he helped build Yanoo Sports.

Disney CEO Bob Iger said that Pitaro's experence makes him the right person to head ESPN.

"Jimmy is a talented and dedicated leader with the right strategic vision, relentless drive and passion for sports required to lead the stellar ESPN team at this incredibly dynamic time," Iger said. "Jimmy forged his career at the intersection of technology, sports and media, and his vast experience and keen perspective will be invaluable in taking ESPN into the future. I also want to extend my utmost thanks to George Bodenheimer for serving as Acting Chair of ESPN these past few months; he is a true industry pioneer and helped make ESPN the undisputed leader in sports."

Comcast has raised eyebrows with its unsolicited $31 billion bid for U.K. satellite giant Sky, a move that both threw sand in the face of 21st Century Fox executive chairman Rupert Murdoch — who has been trying to consolidate the asset for years — and could solidify the U.S. MSO’s stature as king of all media.

Sky is the largest pay TV operator in Europe, with 23 million customers in the U.K., Germany and Italy. It owns original and licensed content and sports, including the coveted domestic rights to English Premier League soccer games. (Comcast’s NBCUniversal is the league’s U.S. rightsholder.)

Sky fits almost every criterion for a Comcast takeover — it’s a leader in its field, it is underappreciated, and perhaps more importantly it has ownership that is under pressure.

Fox, which owns 39% of Sky, has tried to consolidate the company for years. It first tried in 2011, but pulled its offer after a hacking scandal at its British tabloid newspapers made it unlikely a deal would be approved. Fox returned with a sweeter offer in December 2016, valued at £10.75 per share, but has run afoul of British regulators concerned with placing too much power in one company’s hands. Comcast’s bid, at £12.50 per share, represents a 16% premium to Fox’s offer.

Key to Disney Deal
Sky is an integral part of Fox’s sale of certain assets to The Walt Disney Co. — its content and sports assets jibe well with Disney’s own content holdings, many which are already distributed on the platform. Sky also has a compelling OTT product — Sky Now — which fits with Disney’s direct-to-consumer strategy, and Disney chief Bob Iger has called the satellite service a “crown jewel” among the Fox assets.

Fox had hoped to finish the Sky consolidation before the Disney deal closed and to transfer full ownership to the content giant once the deal was completed.

But now that is in limbo. According to BTIG media analyst Rich Greenfield, Fox has four choices: 1) increase its Sky offer and start a bidding war with Comcast; 2) start a conversation with Comcast for all of the Fox assets, while Comcast bids for the remaining 61% of Sky; 3) get Disney to work out a compromise with Comcast, like offering up its stake in Hulu, the Fox production studios (minus the Marvel content) and cable channel FX to back off; or 4) refuse to increase its bid, leaving Disney with the option of either selling its stake in Sky or being a minority partner with Comcast.

Options one and three seem most likely, Greenfield said.

Fox has said publicly that it stands by its December 2016 offer for Sky and hopes it will pass regulatory muster, while noting that Comcast hasn’t actually made a formal bid. Comcast, in announcing the deal publicly, said its bid was the first stage in the process and it hopes to work with Sky’s independent directors to hammer out a proposal.

The prospect of a mogul war between Comcast chairman and CEO Brian Roberts and Murdoch seemed not to sit well with some of the cable firm’s investors, who drove the stock down about 7% after the Feb. 27 announcement. But they seemed to settle down — the stock has started to slowly crawl back in subsequent trading — when it became apparent the deal makes more sense than they might have initially thought.

Gaining Global Reach
Sky would give Comcast tremendous scale, and scale is key to Comcast’s desire for Sky, Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said. With Sky’s 23 million customers, its set-top box technology and its content, Comcast could create a pan-European virtual MVPD and then further leverage its position as the No.1 distributor in the U.S. and Europe to launch a global service.

The Walt Disney Co. and 21st Century Fox held earnings calls last week, but quarterly returns weren’t among the most pressing questions from analysts.

Most of all, Wall Street wondered aloud if the two iconic companies would merge. As deal speculation swirled around both media giants, executives seemed eager to highlight the success of their cable and content properties while acknowledging the changing landscape.

Fox stock surged nearly 15% after reports that it had held talks, since ended, to sell off its 20th Century Fox studio, cable networks FX and National Geographic Partners, and its 39% interest in European satellite TV company Sky to Disney. In that scenario, Fox would have kept Fox News Channel and Fox Business Network, and its regional sports networks, broadcast operation and TV stations.

On Fox’s fiscal first-quarter conference call, executives were quick to point to the success of their cable operations — revenue at the cable unit was up 10% in the period, and affiliate fees rose 11%. Fox said the gains were due to growth across the portfolio.

But despite that success, Fox left the door to any possible deals or divestitures slightly ajar.

“We told you many years ago that innovative disruption would come to our industry,” 21st Century Fox co-executive chair Lachlan Murdoch said on the call. “We moved early to jettison our thin brands and went deep with investments for our rich distinctive brands, when many market pundits were skeptical of this approach.”

Whether that means more “thin brand” paring is due or it was just an attempt to give analysts historical perspective is open to interpretation. But Fox was adamant it has the scale and the assets to execute on its strategy.

At Disney, which escalated the cord-cutting conversation two years ago when it revealed flagship sports network ESPN was losing subscribers, some evidence suggested that erosion may be slowing. On a conference call with analysts Nov. 9, Disney chair and CEO Bob Iger said subscriber losses at ESPN were “not as deep” as they had been in prior quarters, in part because of deals with new over-the-top service providers.

Disney’s fiscal fourth-quarter results were mixed. Iger pointed to two-week Nielsen data that showed when live consumption of sports includes streaming and OTT platforms, ratings rise 25% to 29%, an encouraging trend. But broadcast revenue was down 11% in the quarter, and cable revenue was flat.

While neither Disney nor Fox did much to totally squelch speculation, it appears that the lines drawn in the initial reports — that Disney was doubling down on content and Fox was throwing in the towel — are much more nuanced.

Iger said Disney’s focus is on monetizing high-quality programming, and though he conceded that “some improvement from a quality perspective would be helpful,” he also pointed to the company’s strong production and creative capabilities. Disney has a live-action Star Wars series in development as well as midseason shows that should attract audiences.

“Our intention as a company is to take advantage of opportunities that exist out there today for good television and to produce more of it,” Iger said.

That could point to a deal with Fox, or another programmer. FX is known for high-quality content, and Fox’s TV production studios have cranked out perennial hits like The Simpsons and Family Guy for its broadcast unit, as well as Modern Family for Disney’s ABC.

Deal Wouldn’t Be Disney Cure-All
But not everyone was convinced that a Fox deal would solve Disney’s problems. BTIG media analyst Richard Greenfield, a staunch critic of Disney over the years, wrote in a blog post Nov. 7 that Disney should focus more on companies like Activision for gaming, Spotify for mobile subscriptions and Twitter “to capture the SportsCenter of the future.”

Sanford Bernstein media analyst Todd Juenger, another critic of the pay TV content model, said in a research note that “the chances of a Disney-Fox deal, as described, are very low.”

Lachlan and James Murdoch sure didn’t sound like two media chiefs hot to unload their programming assets Wednesday, spending a good portion of 21st Century Fox’s fiscal first quarter earnings call touting the growth prospects for their cable and satellite operations.

But while neither executive would directly address speculation around their desire to sell assets, they didn’t quite squash all of chatter either.

Fox was said to be in talks, since ended, to sell its movie studio and cable assets like FX Networks and National Geographic channel as well as its 39% stake in European satellite company Sky to The Walt Disney Co. While Fox co-executive chairman Lachlan Murdoch opened up the earnings call telling analyst he would not respond to media speculation, he had plenty of wind left to tout the company’s ongoing operations.

Overall results were strong – revenue was up 8% in the fiscal first quarter and affiliate fee revenue for its cable channels rose 11%, due to contractual increases across all of its brands.

“We told you many years ago that innovative disruption would come to our industry,” Lachlan Murdoch said on the call. “…We moved early to jettison our thin brands and went deep with investments for our rich distinctive brands, when many market pundits were skeptical of this approach.”

He added that because of that strategy, Fox’s brands have full carriage on all traditional and newly launched platforms.

“There is a lot of talk about the growing importance of scale in the media industry. And let me be very clear, Fox has the required scale to continue to both execute on our growth strategy and deliver increased returns to shareholders,”  Lachlan Murdoch said. “We are specifically seeing this in our affiliate fee growth again this quarter and the success of Hulu and our inclusion in all of the emerging MVPDs. We are excited about all of our brands and the breadth of opportunity they continue to offer.”

Asked if the changing landscape Fox is rethinking its asset mix and whether scale matters less or more today, CEO James Murdoch said that the company has changed its portfolio over the past several years.

“We’ve really simplified our operating model, we’ve got a great set of brands and a great set of assets that we really like,” James Murdoch said. “And as you can see from these quarterly results and from the past couple of quarters I hope, a real trajectory of good performance.”

James Murdoch also commented on plans to fully consolidate the Sky satellite TV business, adding that the company continues to work with U.K regulators and hopes to receive approval of the transaction by the middle of 2018.

Rebecca Campbell, president of the ABC Owned Television Stations Group and ABC Daytime, was named president of The Walt Disney Co. Europe, Middle East and Africa.

Campbell succeeds Diego Lerner, who will return to Buenos Aires to take on a new role at Walt Disney International, reporting to chairman Andy Bird.

Related: Feds OK Disney's BAMTech Buy

The changes are effective Jan 1.

“Rebecca’s ability to manage and lead the many disparate and geographically diverse stations across the U.S. with such incredible success makes her the best choice to lead our efforts in such a complex region,” Bird said.

Read more at broadcastingcable.com.

The Walt Disney Co.’s decision to take its powerful content direct to consumers via streaming puts its traditional distributors in an unprecedented place.

Already, traditional pay TV subscriptions are falling. Disney said Tuesday (Aug. 8) during its earnings call that ESPN’s subscriber total was down 3.5% -- a big bite for a network that makes about $7 per month per sub.

“There are many investors who believe that Disney, more than any other company, is responsible for holding what's left of the bundle together,” said analyst Todd Juenger of Sanford C. Bernstein, in a research note.

“Those that hold that view have been waiting for Disney to drop this bombshell, signaling the end of the bundle as we know it," Juenger added. "Did Disney just do that? The answer depends on how much you want to take the (scant) descriptions of these services at face value.”

Related: Losing Disney Movies May Not Hurt Netflix: Analyst

To Marci Ryvicker of Wells Fargo, Disney's announcement led to many unanswerable questions.

"The ESPN service sure sounded to us like management is positioning it (for now, at launch) as an 'add-on' service that would mostly sit on top of the existing ESPN linear networks and deliver extra value and features," Ryvicker said in a note. “How does this impact DIS's upcoming affiliate renewals (CEO Bob Iger did state that he has NOT had conversations with the cable distributors on these services just yet)? How will peers and partners react?”

MCN Flashback, July 27, 2015 > Report: Iger Says ESPN Could Go Direct to Consumer in Five Years

Iger indeed said during the earnings call that Disney had not discussed its plans with its distribution partners. He seemed to think there would not be a backlash.

“As we enter a new round of distribution negotiations, we have all the confidence in the world in our ability to strike deals that are favorable to the company, given the strength of the product that we offer, particularly the strength of the brands,” Iger said.

“If you look very specifically at ESPN, we still see it as a must-have service for the multichannel providers because of the array of product that ESPN has licensed, and what they produce is original programming for the service,” Iger said. “We have seen, as I think that many of you have, a pretty interesting and dramatic increase in -- I'll call it 'app-based media consumption.' Much of it is on over-the-top, direct-to-consumer services.”

How will cable operators react?

“The MVPDs also now face a tough decision," Juenger said. "View this as an upsell partnership? But watch your backs when Disney reaches the inevitable pivot point and decides to go around you.

“Disney makes it sound like they want to position this as a win/win: ‘Upsell your subscribers to new levels of service,’" Juenger continued. "On the other hand, all it will take is a flip of the switch, and Disney can cut the MVPD out of the equation entirely. We can't think of much upside for the MVPDs to be combative with Disney at this stage, at least for the big MVPDs.”

Related > Making the Right Moves: Distributors Strategize in a New Era of Programming

There will be even more pressure on small distributors who are not making money on video and might exit that business to keep making money on high-speed internet.

“But we think the MVPDs will certainly be trying to think of ways to protect themselves against the inevitable future date when Disney goes completely direct,” Juenger said.

Read more at broadcastingcable.com.

Disney CEO Bob Iger has resigned from President Donald Trump's Strategic and Policy Forum over the president's decision to withdraw from the Paris agreement on climate change.

Iger tweeted Thursday that he was resigning in the wake of the Rose Garden announcement, which was covered live by Disney's ABC News.

As a matter of principle, I've resigned from the President's Council over the #ParisAgreement withdrawal.

— Robert Iger (@RobertIger) June 1, 2017

The forum is an advisory council of business executives created during the Trump transition to provide their "individual views to the president—informed by their unique vantage points in the private sector — on how government policy impacts economic growth, job creation and productivity...in a frank, non-bureaucratic and non-partisan manner," the Trump transition team said at the time.

Computer and other technology companies have said they believe the President's decision to back out of the global agreement agreement was a mistake.

"It is very discouraging that President Trump is pulling out of the Paris Agreement to cut carbon emissions," said Information Technology and Innovation Foundation senior fellow David Hart. "The United States’s abdication of global leadership will diminish confidence in the pact and discourage other nations from staying the course, while also making it more difficult for the United States to forge robust alliances with other nations on other issues of joint concern."

Pay TV subscriber rolls continued to dwindle in the seasonally weak second quarter, as losses from telco-TV service providers continued to weigh heavily on the sector.

Meanwhile, continued improvements by cable operators and declines at content providers suggest a widening gap between cord-cutters and cord-shavers.

The pay TV industry lost 757,000 basic video subscribers in the second quarter, an increase from the 683,000 it lost in the same period last year, according to MoffettNathanson principal and senior analyst Craig Moffett. Including estimates from Dish Network’s Sling TV over-the-top service, the sector lost 708,000 subscribers in 2016 and 613,000 customers in 2015.

Cable continued to temper its customer declines: It shed 242,000 video customers in the period, nearly half the 404,000 it lost in the prior year. But telco-TV losses increased exponentially at 526,000 for the quarter, compared to a gain of 5,000 in the prior year.

Satellite-TV providers continued on their roller coaster ride, adding 12,000 in the period compared to a loss of 284,000 in the prior year. Exactly where those customers are going is a little murkier. There has generally been a straight line from multichannel video programming distributor (MVPD) losses to cord-cutting, but that path has become a little less clear over the past several quarters.

The Walt Disney Co. has shed more than 4 million subscribers over the past year, while content companies such as Discovery Communications and Time Warner Inc. have estimated subscriber losses of about 2%. Those figures are based on Nielsen data that doesn’t take into account over-the-top distributors (which could number about 800,000 subscribers via Moffett’s estimates) and skinny bundles from traditional and non-traditional sources.

“[H]ere’s what we do know. Cable is doing well. The telcos are doing badly. And satellite is mixed,” Moffett wrote in a note to clients.

BTIG media analyst Rich Greenfield, who has for years warned that OTT services are a real threat to the traditional MVPD subscriber base, sees the Q2 results as more evidence that the traditional pay TV model is eroding.

Though he doesn’t expect a wholesale collapse anytime soon, Greenfield wrote in a blog post that he sees the pay TV model getting slowly chipped away.

“Just a few years ago, the industry was adding video subs at a 1-2% rate; now the industry is losing 2% through cutting/shaving, not to mention the growing pressure from cord-nevers,” he wrote. Data suggests annual losses of 3, 4 or even 5% could become reality in the next few years, he added.

“It may not happen, but it certainly feels like the big TV bundle is becoming less and less important to consumers, given a poor price/value equation,” he wrote.

Moffett said telco TV’s erosion is due partly to the “perfect storm” of a strike at Verizon Communications, Frontier Communications’s initial problems in transitioning former Fios TV markets it bought earlier this year and AT&T’s conversion of U-verse TV subscribers to DirecTV.

Even considering those developments, telco TV’s reversal of fortune is extraordinary. Moffett noted that telco TV subscriptions have gone from a 6.1% increase to a 9.1% decline in just one year.

Cable operators continued to build on the momentum of past quarters. Comcast improved its video losses in Q2 to just 4,000 (compared to a loss of 69,000 in the prior year — its best second quarter in more than a decade), while Charter Communications lost 152,000 video customers in the period, better than the 170,000 it shed in Q2 2015. Cablevision, now part of Altice USA, lost just 2,000 subscribers for its best Q2 in four years.

“Can cable’s relative position get any better?” Morgan Stanley media analyst Ben Swinburne asked in a note to clients. He pointed to Charter’s improvements, adding that more are expected.

“[W]e think Charter’s best market share days remain ahead of it,” Swinburne wrote.

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said he believes cable’s momentum will continue at the expense of the telcos. “In the end, cable simply has a better mousetrap, which will become even more apparent in ’17 when cable inexpensively upgrades its network for DOCSIS 3.1 and its 1 [Gigabit-per-second]-plus potential download speeds,” he wrote in a note to clients.

As the private jets returned from Allen & Co.’s annual media mogul summer camp in Sun Valley, Idaho, last week, speculation around possible deals in the content sector grew louder.

Allen’s conference has been the petri dish for several huge media mergers over the past several decades — including The Walt Disney Co.’s 1995 purchase of Capital Cities/ABC, Comcast’s 2009 acquisition of NBCUniversal and Verizon Communications’s 2014 purchase of AOL.

And this year’s soirée comes at a pivotal point in the content business, as programmers contemplate adding scale to compete against heftier distributors like Charter Communications and Altice USA, as well as subscription video-on-demand services such as Netflix.

At the same time, boardroom turmoil at Viacom — Shari Redstone, a company director and Sumner Redstone’s daughter, was a much-watched figure at the Allen conference — could set the deal wheels moving at full speed. Analysts would like to see Viacom and its former bandmate CBS reunite, but there is also the possibility the parent of MTV, Nickelodeon and Comedy Central could continue to go solo or attract the attention of a larger suitor, such as 21st Century Fox.

Consolidation has always been an option for programmers in a land of giant distributors. Most analysts expected a wave of deals after Charter made its first overtures to Time Warner Cable in 2013, starting with Fox’s aborted $80 billion takeover of Time Warner Inc.

MERGER FEVER RETURNS

Content merger fever waned in 2015, when stocks fell sharply over subscriber-loss concerns. But deal activity has begun to pick back up, with last month’s $4.4 billion Lionsgate-Starz merger and NBCUniversal’s $3.8 billion purchase of DreamWorks Animation.

Download "Media's Free Radicals," a guide to the content consolidation possibilities. 

According to research company Mergermarket, which tracks the number and value of media deals globally, 260 transactions worth $43.9 billion were announced in the first half of 2016, up 91% from the $23 billion announced in the same period in 2015. That pace is expected to continue.

Mergermarket TMT Group Sector editor Ed Mullane said in an interview last week that more deals will come in the wake of Starz-Lionsgate, as programmers look to insulate themselves from larger distributors demanding lower prices and skinnier packages, as well as SVOD companies that are pumping billions of dollars into original programming.

“Lionsgate and Starz is an example of two companies that didn’t have the scale to compete against the new players and the incumbent players,” Mullane said.

Netflix, which has committed to spend about $6 billion on content in 2016, also is driving consolidation talk, especially among smaller programmers.

“How are production companies going to compete against that?” Mullane asked. Bigger may be better.

THE LIONS’ DEN

Lionsgate, which many pundits see as cable legend John Malone’s latest consolidation vehicle — he owns 4.5% of Lionsgate and is the largest individual Starz shareholder — is expected to go back to the deal well. And it makes sense in that Malone’s hands are tied on the distribution-deal front, at least for the near term, as Charter focuses on integrating its $78.7 billion purchase of Time Warner Cable.

On a conference call with analysts after the Starz transaction was announced, Lionsgate vice chairman Michael Burns said the Starz deal “would not preclude us from additional acquisitions.”

Wunderlich Securities media analyst Matt Harrigan said he believes Lionsgate will reenter the deal fray within the next 18 to 24 months, but its potential targets are unclear. Movie studio Metro-Goldwyn-Mayer is a possible target, as is Viacom’s Paramount Pictures, which is in the process of selling off a minority interest.

While in the past some pundits have pointed to another Malone holding — Discovery Communications — as a target, particularly because of its reality programming, that value diminished after Lionsgate’s purchase of Pilgrim Studios late last year.

For Harrigan, the most likely consolidation candidates are Viacom, CBS and Time Warner Inc., for two simple reasons: Viacom and CBS shouldn’t have been broken up in 2009 in the first place, and Time Warner’s corporate structure — it has no overly dominant shareholder — makes it ripe for a takeover.

Rupert Murdoch’s 21st Century Fox, which abandoned its $80 billion pursuit of Time Warner Inc. back in 2014 after the Time Warner’s board of directors nixed that deal, could rethink another bid. Adding to the speculation is that Time Warner’s stock has fallen below the $85-per-share threshold of the old Fox bid.

Back in 2014, one of Time Warner’s biggest arguments against the merger was that it could surpass the per share valuation of the Fox off er, which it did for a period. But like other media stocks, Time Warner shares have fallen, as pressures from over-the-top and subscription video-on-demand providers and a weak advertising market have taken their toll.

Time Warner stock is up about 15% ($9.87 each) so far in 2016, but the shares are down 14.6% in the past 12 months. Like many programming stocks, Time Warner never fully recovered from the August 2015 sector bloodbath in the wake of Disney’s revelation that sports programmer ESPN had lost subscribers. It was also the last time that Time Warner shares traded above the $85-per-share mark Fox set in its aborted takeover bid.

Typically, weak stocks and readily available capital — despite the economy, debt is still cheap — lead to deals.

“The obvious target is Time Warner,” Mullane said. “It doesn’t have the ownership structure that large companies do. Everyone would target Time Warner.”

A Viacom-CBS deal makes sense in that adding broadcast network CBS could give cable programmer Viacom additional leverage during carriage negotiations. For CBS, the benefits are less evident, and Harrigan said that a recombination could attract attention from regulators.

“Gigantism can be a little unhealthy,” Harrigan said.

Adding to the fray is the emergence of several Chinese companies into the U.S. entertainment sector. Focus Media, a Chinese advertising and media conglomerate, has said it plans to invest heavily in sports and entertainment properties. Other players like e-commerce company Alibaba and conglomerate Dalian Wanda Group have focused on movie studios, but could turn their heads toward pay TV content.

Still, Harrigan said he doesn’t see an imminent combination of major media properties because of the regulatory angle. For example, he estimated that a Fox-Time Warner hookup would create a company that generates about 40% of total linear TV production through its 20th Century Fox and Warner Bros. studios. That concentration, he said, has little chance of cutting the regulatory mustard.

Moreover, the top five programmers already have a “ridiculous amount of eyeballs,” Harrigan said, so adding another huge company to the mix doesn’t necessarily solve any problems.

Plus, with the advent of skinny bundles, consumers want packages of fewer channels, not more networks being forced on them from a mega-programmer with dozens of channels.

SMALL BUT MIGHTY

Indeed, for all of Malone’s emphasis on “free radicals” in the programming business, there’s no guarantee that bigger is better. Some of the most-watched and respected shows on TV are coming from smaller networks like AMC, which has the top-rated show on cable, The Walking Dead. AMC Networks CEO Josh Sapan said as much at last month’s Gabelli & Co. Movie & Entertainment conference.

“Big is better if it’s really good stuff, and big is worse and is a weight if it’s not really good stuff ,” Sapan said at the conference. “You would rather not have that weight because it will actually burden your fair reward for what you have that is performing.

“Scale’s good if the stuff punches at or above weight,” he added. “Scale’s bad if the stuff punches below weight.”

There is an argument for both philosophies, Harrigan said, adding that having multiple networks can help insulate a programmer from a chilly ratings spell.

“If you’re hot and you’re small, people want the content,” Harrigan said. “But if you hit a cold streak, you’re irrelevant.”

It hasn’t been a good week to be Philippe Dauman.

The Viacom executive chairman and CEO is a regular target of irate shareholders who blame him for the content company’s precipitous fall over the past few years. Now, he’s even taking shots from his onetime friend and mentor, and Viacom’s largest shareholder, Sumner Redstone.

Redstone’s moves to oust Dauman and longtime Viacom board member George Abrams from the trust that will manage Redstone’s controlling stake in Viacom after his death or incapacitation has fueled mounting speculation that Dauman is being forced out.

While Dauman works hard to repair his reputation, signs point to a showdown with Redstone’s daughter and Viacom nonexecutive vice chair of the board Shari Redstone, who has been gaining influence in the trust. Lawsuits have traded back and forth: Dauman to block Redstone’s moves, Shari Redstone to have her father’s wishes upheld.

As the palace intrigue roils on, it might be time to take a closer look at Dauman’s performance by comparing his often-criticized pay package with the rise or fall of Viacom’s market capitalization over the past five years.

Related:Viacom Board Prepared to Fight

There has been much talk of Viacom’s mismanagement and how executives were more interested in cashing massive compensation checks while ignoring trends in the TV business. That is all a matter of perception, though: Few current pay TV executives could have anticipated the rise of OTT players and skinny bundles five years ago, and most didn’t.

At the same time, whether or not its youth-oriented channels make it a canary in the coal mine for the rest of the TV business, one unmistakable fact is that under Dauman and his top lieutenant, chief operating officer Tom Dooley, Viacom has faltered in the past few years.

A quick look at the stock price is evidence of that. Viacom shares are down about 25% since May 2011, shedding about $19 billion in market cap. At the same time, Dauman has received nearly $200 million in total compensation over that span and Dooley received $154 million in salary, stock-and-option awards and incentive compensation.

Since 2014, when Viacom stock was trading in the $80 range, the falloff is more dramatic. Since March 10, 2014, when Viacom shares closed at $88.90 each, the stock is down more than 50% to $39.95 on May 24, subtracting about $20 billion in market cap. Dauman and Dooley reaped a combined $145.8 million in total compensation over that period.

Dauman and Dooley aren’t the only media executives who have been criticized over their pay packages — and they aren’t even the highest paid. That distinction belongs to Discovery Communications CEO David Zaslav, who has received $324.1 million in total compensation in the past five years, skewed mostly because of one-time awards in 2014 that inflated his total pay to $156 million that year. Viacom’s sister company CBS was second, with chairman and CEO Les Moonves receiving $313 million in total compensation in the past five years.

But while Disney chairman and CEO Robert Iger received $199 million in total compensation between 2011 and 2015, for instance, Disney’s market cap soared 144.6% from $41.1 billion to $100.5 billion. CBS is up 105.6% to $54.2 billion from $26.4 billion in 2011; 21st Century Fox is up 69.6% to $28.9 billion from $17.1 billion in 2011; and Discovery is up 23% to $26.8 billion from $21.8 billion in 2011. Viacom’s market cap has fallen from about $35 billion in 2011 to $16.7 billion as of May 25.

Whatever the outcome, some analysts believe Dauman’s days are numbered. In a research note last week, Telsey Advisory Group media analyst Tom Eagan charted out several scenarios that ultimately end with Dauman’s ouster.

In a piece titled “Jersey Shore Has Nothing on This,” Eagan noted board changes at Viacom and National Amusements (the vehicle that holds Redstone’s Viacom stock). “We expect that Sumner and Shari Redstone will attempt to make changes in Viacom executive management, chiefly replacing CEO and chairman Phillippe Dauman,” Eagan wrote. “Although Mr. Dauman has the support of the Viacom board, we expect changes in that board.”

The past 12 months have been rough on The Walt Disney Co., with cord-cutting, cord-shaving and skinny bundles eating away at its flagship cable network ESPN’s subscriber base and, more recently, with the abrupt resignation of chief operating officer Thomas Staggs, heir apparent to the CEO throne.

As the perennially rock-solid Disney’s foundation begins to show some cracks, some analysts are calling for some radical changes, like opening its wallet wide to purchase subscription video-on-demand pioneer Netflix.

BTIG media analyst Rich Greenfield, a sharp critic of Disney’s failure to develop a direct-to-consumer strategy for its content and what he calls its overpayment for sports rights, believes a Netflix buy could solve two looming Disney problems in one swoop.

Greenfield in a blog called a Netflix deal an “acquihire,” made to bring in additional management expertise as well as assets.

While a Netflix-Disney pairing would create a formidable programming offering across all devices, mixing Disney’s movie studio, cable and sports content with Netflix’s original shows and deep library, the best part of the deal could be what it potentially adds to the C-suite.

With Disney chairman and CEO Bob Iger slated to retire in 2018, Netflix CEO Reed Hastings, whom Greenfield calls “a visionary CEO who understands the future of content and video programming,” could easily slip into the top role. Netflix could also solve Disney’s direct-to-consumer dilemma. It would make an over-the-top ESPN service more palatable and fill Netflix’s one programming hole, live sports.

But the price would likely be enormous. Greenfield doubted Netflix would sell for less than $100 billion. That’s well outside the $4 billion to $7 billion range of Iger’s most recent deals with Pixar Animation Studios, Lucasfilm Ltd. (which brought Disney the Star Wars movie franchise) and Marvel Entertainment (solidifying its superhero content slate).

“Buying Netflix is an awfully expensive acquihire, but it could be Disney’s only hope,” Greenfield wrote.

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak is not so sure. He was an earlier proponent of Disney buying a stake in Netflix back when the stock was in the $40 per share range, when a Netflix stake would have let Disney capture some of the upside in the SVOD business early on and when Disney would have strengthened Netflix with more content.

An outright purchase of Netflix today, when it is at the height of its value — it was priced at $110 per share last week — could be throwing large sums of money at a bad idea.

With Netflix’s enterprise value of $45 billion, Wlodarczak said a deal could be done at $65 billion (representing a 50% premium) but would be too expensive for Disney. And it would likely remind investors of another illtimed and value-sucking mega-merger: Time Warner Inc.’s $64 billion marriage with AOL in 2000, considered to be the worst media deal of the 20th century.

Disney already has a content deal with Netflix, Wlodarczak noted. If it wants to go direct-to-consumer, he said, it has the content through ESPN, ABC and Disney Channel to do so on its own.

“The risk, of course, is that no one monetizes the current pay TV ecosystem better than Disney,” Wlodarczak said, adding that it would not be in Disney’s interest to create a low-cost alternative to subscription TV.

An ESPN-Netflix pairing could also mean the consumer price for Netflix would rise materially, were Disney to try to emulate what it gets from distributors today. And reportedly only 20%-30% of TV viewers watch sports.

“At this point Disney is better served letting SVOD develop and trying to continue to mark up the price of their content as much as possible to multiplying SVOD players,” Wlodarczak said.

The Walt Disney Co., battered by fears over flagship cable-sports network ESPN’s declining subscriber base and inability to release an over-the-top product, may not be a lost cause after all, according to a JP Morgan analyst who found the hole the programmer fell into six months ago may not be as deep as some think.

In a 22-page report last week, JP Morgan media analyst Alexia Quadrani called the panic over ESPN’s subscriber losses and fears that the network paid inflated prices for sports rights to keep them out of rival networks’ hands “exaggerated,” adding that even with a 2% annual decline in its subscriber base, Disney’s cable networks can continue to grow.

Despite reports to the contrary, ESPN could introduce an OTT product as soon as 2018 at a price that could be compelling to rabid sports fans.

CRITICS HAVE PILED ON

Disney stock has never quite recovered from its slide in early August, when the company said ESPN had lost 3 million subscribers in 2014 and 7 million since 2012. The idea that the network, long believed to be pay TV’s must-have service, was affected by cord-cutting and so-called skinny programming bundles triggered a sell-off across the sector, with programming stocks losing a combined $60 billion in market capitalization.

The bad news kept coming even as Disney’s movie studio prepared for the much-anticipated December release of Star Wars: The Force Awakens. BTIG media analyst Rich Greenfield, a longtime Disney critic, said in a blog post that ESPN’s fee structure would make it impossible for it to launch its own direct- to-consumer offering.

Later, Greenfield introduced a survey by consumer marketing and intelligence company Civic Science that said more than half of those surveyed would drop ESPN if they could save $8 per month on their pay TV bill.

Other analysts also have lowered their ratings on the stock, including Barclays media analyst Kannan Venkateshwar, who downgraded Disney to “underweight” on Jan. 15, primarily on ESPN fears. ESPN has about $53.4 billion in off-balance sheet programming costs because of sports, Venkateshwar said, which could be exacerbated by a declining subscriber base.

“If the company’s subscriber loss trend lines do not stabilize, the company’s cost recognition may have to accelerate to catch up with revenue trends,” Venkateshwar said in a report.

Quadrani hasn’t ignored the declines; she just doesn’t think they will have as great an impact as others who follow the sector. Even with a 2% annual subscriber decline, ESPN could still grow its affiliate fees by 53% over the next five years, she estimated, from $6.64 per subscriber per month in 2015 to $10.18 per sub per month by 2020.

At that rate, ESPN would grow its affiliate-fee revenue by 39%, from $7.4 billion in 2015 to $10.3 billion in 2020, even with the subscriber decline. Quadrani also estimated that ESPN could go over the top as early as 2018 with a $20-permonth offering, or about the same price that OTT service Sling TV charges for about 20 channels, including ESPN and ESPN2.

OTT OPTIONS OPEN

That’s still considerably less than some earlier estimates that ESPN would have to charge upwards of $36 per month for a standalone offering, a factor of its investment in sports programming. While others have criticized the worldwide sports leader for paying big for football, basketball and baseball rights, Quadrani argued that is exactly what would make an OTT offering most compelling.

Quandrani said the OTT offering could capture about 15% of the 12 million subscribers lost from 2010 to 2018 in its first year and 15% of incremental customers lost in each subsequent year.

Disney has said it has no plans to offer an ESPN OTT product anytime soon, and Quadrani said it doesn’t need to. “If Disney chooses not to move forward with an OTT offering, we still see ESPN remaining a healthy and profitable business,” she wrote.

SIDEBAR: Up With OTT

JP Morgan media analyst Alexia Quadrani believes ESPN can launch with a direct-to-consumer offering for as little as $20 per month, beginning in 2018 — and that it could help recapture some of the subs linear ESPN has lost.

                                                      2018E                     2019E            2020E

Subscribers                                   1.75 million             2.02 million      2.27 million

Penetration of Lost Linear Subs   15%                         15%                    15%

Annual affiliate fees at:

$15/month                                     $315 million             $363 million       $409 million

$20/month                                     $421 million             $484 million       $546 million

$25/month                                     $526 million             $605 million       $682 million

SOURCE: JP Morgan estimates

Cord–cutters, shmord-cutters.

The notion that cord-cutting millennials will erode the cable business into oblivion is being turned on its ear, as cable operators across the board are reporting some of their best video-customer results in nearly a decade and their younger, cooler satellite and telco TV counterparts have encountered mounting losses.

The trend continued last week as Cablevision Systems reported better-than-expected results in third-quarter 2015. Cablevision — which has been a victim of its own success and stepped up promotional efforts by telco Verizon Communications — reported a loss of 33,000 basic-video customers, a 10.5% improvement over the 56,000 video customers it lost in the same period in 2014.

Though customers are still leaving, the erosion has slowed. The results build on those of Comcast, Time Warner Cable and Charter Communications, each of which in the past few weeks reported their best basic-video customer improvements in about a decade.

Comcast was first out of the blocks, reporting on Oct. 27 a third-quarter loss of 48,000 video customers, nearly half of what it shed in the same period last year and its best third-quarter performance in nine years. It was followed by Time Warner Cable, which shed just 7,000 basic-video customers (compared to a loss of 184,000 in the prior year), and Charter Communications, which gained 12,000 basic-video customers, its first increase since the fourth quarter of last year and a big improvement over its 9,000-customer loss in Q3 2014.

CABLE HOLDS ITS OWN

And telco-TV providers are no longer taking up the slack for cable losses. In the third quarter, AT&T — which completed its $48.5 billion purchase of satellite giant DirecTV in July — reported a loss of 92,000 U-verse TV subscribers. At the same time, Verizon Communications said its FiOS TV service added 42,000 customers in the third quarter, one-third of the 114,000 it added in the same period last year.

The improvements reveal that even in the face of stiff competition (Cablevision has the greatest exposure to Verizon’s FiOS TV product at 49% of its footprint), cable has managed to hold its own.

The trend of cord-cutting — stopping monthly subscriptions to MVPDs — isn’t over by any means. Collectively, all pay TV providers are still losing customers, and most are expected to do the same in the fourth quarter. What’s new is, cable is gaining share in relation to its telco and satellite rivals.

The results have some analysts wondering if they should rethink the whole cord-cutting concept.

“It is time to ask whether we’ve got the story right,” MoffettNathanson principal and senior analyst Craig Moffett wrote in a recent research note.

But not everyone sees a sea change. Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak said AT&T was likely distracted by its merger with DirecTV — satellite-TV provider DirecTV added 26,000 net new customers in the period, compared with a year-ago loss of 28,000 net customers — and should recover in later quarters. And the practice of “cord-shaving,” or migrating to a less-expensive video package, including basic cable, may explain some of the industry’s performance, he said.

From almost the beginning, cord-cutting was seen as a cable problem, Moffett continued, and investors took solace in the fact that MSOs at least had the broadband business to fall back on, if video revenue were to disappear.

Broadband has played a major role, and cable is by far the dominant provider of that service (in the second quarter, cable accounted for 100% of broadband customer additions, only the second time that has ever occurred).

But cable’s relentless focus on expanding its video-on-demand libraries and lineups, enhancing its user interfaces and beefing up its authenticated TV everywhere offerings and apps have also made it and its much maligned video, voice and data bundle into a more attractive choice.

MORE THAN BROADBAND

“Cable is now unmistakably taking share from satellite, and telco TV is fading fast,” Moffett wrote, adding that broadband deserves some credit for the transformation.

“But some of it owes to fundamental changes in the way we are watching TV,” he added. “Cable’s two-way architecture and Comcast’s best-in-class user interface and VOD libraries are emerging as genuine sources of competitive advantage.”

Comcast’s X1 operating system is seen by many as the gold standard for content navigation. At the recent Next TV Summit in New York, Bank of America Merrill Lynch media analyst Jessica Reif Cohen half-jokingly wished that regulators had approved Comcast’s merger with Time Warner Cable just so New Yorkers could finally experience the X1 interface.

And seamless navigation is becoming critical to cable operators’ survival. Clunky text-only, scrolling interfaces offered by many providers are now met with derision by customers who find their smartphones are much more intuitive.

With new sources of traditional shows and short-form content emerging practically every day, finding an elegant way to choose entertainment has become a priority not only for consumers but for the content providers as well.

Last week during the company’s earnings conference call, The Walt Disney Co. chairman and CEO Bob Iger listed his top three essential elements for media success. No. 2, in between high-quality programming and mobility, was creating a “fantastic user experience with incredible interface navigation.”

“You have to make the service easy to use and the content easy to find,” Iger said.

CLOSING THE WINDOWS

Other programmers are getting into the act as well. Last week Time Warner Inc. chairman and CEO Jeff Bewkes said the programmer is evaluating whether to retain its content rights for longer periods or even “forgo or delay certain content licensing,” which would essentially push windows for online subscription video-on-demand services such as Netflix closer to those for syndication.

SVOD licensing generally brings in less revenue than traditional licensing through cable, satellite and telco operators, Bewkes said, and has no advertising revenue attached.

“We think a lot about how to enhance the value of the traditional pay TV bundle and it’s something we’re obviously looking at [with] our networks,” Bewkes said.

In a note to clients, Sanford Bernstein media analyst Todd Juenger praised Time Warner Inc.’s moves, adding that they won’t be effective unless other programmers follow suit.

“It’s also very important, we think, not to just curtail SVOD licensing,” Juenger wrote. “It’s equally important what you choose to do with the content instead. We think the best answer is: Put it on cable/satellite VOD, as part of the bundle.”

The bundle — thought not too long ago to be the reason for high cable prices by forcing customers to pay for channels they don’t watch — is increasingly becoming the more attractive alternative to over-the-top video offerings like Sling TV, Sony’s PlayStation Vue and others. In a research note, RBC Capital Markets media analyst David Bank wrote that when higher charges for standalone broadband service and limited choices for programming are considered, the cable bundle is still the best value.

“A household could save more money forgoing two bottles of wine in a month rather than replacing traditional cable TV with an OTT-based lighter bundle,” Bank wrote.

While Wlodarczak isn’t convinced that cord-cutting or cord-shaving is easing up, he believes cable will continue to improve its results in the fourth quarter. Charter will add about 30,000 video customers in Q4, he predicted, ending the year on a positive note, while Time Warner Cable and Comcast should be flat and Cablevision will lose about 30,000 over the same timeframe.

“I think it is too early to make the call that cordshaving needs to be rethought,” Wlodarczak said. “I think it is here to stay, but as I have noted in the past, I think it will be likely more contained than most media investors seem to be pricing in — one-to two percentage points of decline driven mostly by the fact that pay TV is increasingly too expensive.”

The turnaround in the cable business hasn’t been a one-quarter phenomenon. The turn in the tide for cable-subscriber losses started four years ago, with Comcast in 2011. Since then, the nation’s largest cable operator has reported basic video-subscriber improvements in 14 of the past 15 consecutive quarters, reducing losses by a staggering 83%.

At the same time, No. 2 U.S. operator Time Warner Cable, after a dark period in 2013, has turned around its operations. TWC reported improved basic video subscriber results in the past six consecutive quarters.

Charter, which reported positive quarterly subscriber growth four times in the past two years — 20,000 in Q1 2012; 18,000 in Q1 2014; 3,000 in Q4 2014; and 12,000 in Q3 of this year — is continuing on that path and, along with TWC, has estimated that it will report positive basic-video customer growth this year.

RIVALS TRENDING DOWNWARD

While cable has shown consistent improvement, telcos and satellite providers have been mired in an opposing trend. Once the main growth engines for the pay TV sector, AT&T and Verizon have seen their TV-subscriber growth dwindle in the past two years.

AT&T added 924,000 U-verse TV customers in 2013 and 680,000 in 2014, but in the first nine months of 2015, that growth has dissipated to a loss of 64,000 customers.

Growth at Verizon — which did not close a megamerger this year — has also slowed down. The telco added 536,000 FiOS TV customers in 2013 and 387,000 in 2014. So far this year, the telco has added 158,000 FiOS TV customers.

On the satellite side, Dish Network — which is scheduled to release third-quarter results on Nov. 9 — has struggled with subscriber losses, shedding 79,000 net subscribers in 2014. In the first half of this year, Dish has lost a total of 215,000 net customers.

All of this seems to bode well for the cable industry.

“Cable’s improvement in basic video looks sustainable,” Moffett wrote.

A combination of fear, loathing and uncertainty converged on cable programming stocks in two extremely volatile days last week, sending investors stampeding toward the exits in a massive market correction that some analysts said could be a sign of things to come.

The Walt Disney Co. chairman and CEO Bob Iger inadvertently sparked a sell-off after his comments during an earnings conference call on ESPN refuting some reports that said the Worldwide Leader in Sports had shed 3.2 million subscribers in the past 12 months (he said losses were “modest”). More importantly, Disney took down guidance for its cable networks (of which ESPN is a huge part), stating that instead of high single-digit percentage operating-income growth through 2016, the cable segment would report mid-single-digit percentage growth.

Iger’s comments came just as the market was digesting a flurry of negative news: a sector-wide slump in ratings and ad sales; the growing popularity of over-the-top video; the resultant increase in cord-cutting; and, worst of all, no currency to measure that viewer shift.

It was enough to create a mini-panic in the media sector of the stock market. At one point, every major cable media stock was down at least 10% on Aug. 5. The media sector lost a combined $60 billion in market capitalization during the period, according to Bloomberg.

PANIC STRIKES

“Yesterday was probably one of the most challenging days media investors have ever had — literally,” RBC Capital Markets media analyst David Bank told CNBC Aug. 6.

He wasn’t really exaggerating. The one-day drop for the sector on Aug. 5 was one of the worst since 2008, when the advent of the Great Recession sent shares across all sectors down by double-digit percentages. When the market closed on Aug. 5, Discovery Communications led a parade of losers, falling 12.1%; followed by Disney, down 9.2%; Time Warner Inc., down 9%; Viacom, down 7.5%; AMC Networks, down 7.2%; and 21st Century Fox, down 7%.

The declines also bled into non-programming stocks. Comcast, which owns programmer NBCUniversal but derives more than 60% of its revenue from its cable-distribution operations, fell 5% on Aug. 5 to $59.81 per share. Other cable distributors followed suit, with Charter down 1.5%, Time Warner Cable down 1% and Cablevision Systems down 1.2%.

The bloodbath continued on Aug. 6, with Viacom plunging 14.2% ($7.31 each) to $44.10 per share after reporting a sharp 9% decline in domestic ad revenue in its fiscal third quarter. For the other stocks, the losses weren’t as heavy, but they continued, with Fox down 6.4%; AMC Networks down 4.2%; Disney down 1.8%; and Time Warner Inc. down 1%. Discovery gained some ground, up 3.5% on Aug. 6, but not enough to erase the previous day’s losses. The stocks began to claw back on Friday, with Viacom and Fox up about 3% each and others rising about 1%.

Investors have been skittish about over-the-top video, declining ratings and falling ad revenue before, but those fears seemed to reach a peak after hearing Iger talk of possible weak spots in what most had believed was ESPN’s otherwise impenetrable armor.

Bank told CNBC that Iger’s comments were among the biggest factors in the selloff. Coupled with Disney’s stature as one of the most broadly held media stocks in the world, they created a perfect storm.

“I think the average media investor knew there was some vulnerability to the cable bundle,” Bank told CNBC. “But if even ESPN is vulnerable, if the gold standard is vulnerable, then maybe everybody else is vulnerable.”

But BTIG media analyst Rich Greenfield, who has warned of the perils of OTT and SVOD to the distribution sector for years, said the worst has yet to come.

“I would just stay away,” Greenfield told CNBC of Disney on Aug. 5. “As you look at the future, the cable bundle is starting to become unhinged. Consumers are just giving up on multichannel television.”

Bank added that Iger’s comments were nothing new to longtime media investors. The possible effects of cord-cutters, over-the-top competitors and poor ratings have been hot topics for years. And today’s sell-off could be tomorrow’s buying opportunity. Already the stocks started to claw back slightly on Friday, with Viacom and Fox up about 3% each and others rising about 1%.

But the 48-hour stretch between Aug. 5 and Aug. 6 seemed to feed into a growing herd mentality among media investors, who stampeded away from what they perceive as a danger.

In a note to clients, MoffettNathanson principal and senior analyst Craig Moffett said the sell-off is another indication of a change in sentiment among media investors. Whether it’s based on fact doesn’t really matter.

“Almost every investor with whom we have spoken has described an almost palpable sense that sector sentiment has changed, some would say perhaps permanently,” Moffett wrote.

CONTENT’S REIGN OVER?

After years of hearing that “content is king,” some believe sentiment is beginning to shift gradually toward distributors, which have had their own pressures with over-the-top services and cord-cutting. But while the change in viewing habits, up to now, has mainly affected cable operators, satellite and telco-TV service providers, investors are beginning to realize that the disintegration of the pay TV bundle could have an equally devastating effect on programmers.

Distributors are not taking the threat lying down. Content companies, which have offset ad revenue and ratings declines by cutting distribution deals with OTT players, are now beginning to feel the pushback from pay TV distributors.

Charter Communications CEO Tom Rutledge recently told analysts that when content companies make the programming they sell to cable companies available in other spaces in pursuit of ancillary revenue, they risk diminishing the value of those offerings.

“No trend goes unchecked forever,” Rutledge said.

Dish Network chairman and CEO Charlie Ergen said although distribution is gaining some leverage, Netflix is the “most powerful content aggregator in the world today,” mainly because of its cost structure.

Netflix pays for programming at a fixed price, while Dish pays on a per-subscriber basis. That disparity, Ergen said recently, has caused Dish to change its approach to content deals.

“We have to now look at each content deal and decide whether, long-term, that content-to-content deal makes sense for us,” Ergen said on a recent call with analysts. “When somebody comes in and says, ‘I want a double-digit rate increase,’ and they’ve had double-digit viewership declines, we don’t think that math works for us.”

The shift in viewing habits — people are watching more programming on different devices and platforms inside and outside the home — has been going on for years, as has the cry for a new measurement metric to track just how many people are watching. Measurement companies are responding: Nielsen is expected to unveil its Total Audience Measurement product by the end of the year, and ComScore and Rentrak both have products tailored to tackle the change, but so far nothing solid has been released. If the programming sector sell-off continues, will that speed development of a new measurement currency?

“The primary beneficiaries of the sell-off of the entertainment stocks are the measurement stocks,” Telsey Advisory Group media analyst Tom Eagan said. “Essentially, declines among the programmers might finally convince them to come to an industry consensus on a crossplatform metric or currency.”

CHART: To see how major content stocks fared during the downturn, click here.

The Walt Disney Co. said it extended Bob Iger’s contract as chairman and CEO of the company through June, 30, 2018.

Under Iger’s predecessor, Michael Eisner, Disney had trouble setting up a succession plan as a series of heirs apparent fell out of favor. It is not clear who at the company would succeed Iger when he does retire, two years later than previously planned.

Under Iger, the company has been successful, with acquisitions of iconic brands such as Marvel and Star Wars helping to boost the company’s stock to record levels. Disney has also been a leader in adopting new technologies throughout its business.

For more, see this story at broadcastingcable.com.