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Disney COO Staggs Backs Pay TV Bundle

The Walt Disney Co., which helped to send media stocks into a tailspin by acknowledging a small drop in pay TV subscribers and slower profit growth at ESPN, stressed it is working to preserve and enhance the cable bundle.

Disney’s new COO Tom Staggs, speaking at the Bank of America Merrill Lynch 2015 Media, Communications & Entertainment Conference Thursday, said that while other media companies are experimenting with over-the-top and direct-to-consumer models, he doesn’t see Disney going over the top for the foreseeable future.

Staggs said he thought the media stock selloff was an overreaction to conditions in the TV marketplace. The selloff started after Disney’s latest earnings call, as CEO Bob Iger’s remark that ESPN had lost some subscribers raised concerns about the growth in distribution revenues.

“We continue to believe in the value and the appeal of the multichannel bundle. That value and appeal is going to continue for a long time,” Staggs said. “We also know that as the market evolves and as these platforms have access to more technologies, there will continue to be opportunities to improve the value proposition of the bundle in everything from user interface to navigations, to search, access to programming and it’s incumbent upon us and the distributors to make sure we’re taking advantage of opportunities to improve the user experience.”

He added that the bundle shouldn’t be viewed as a static product. “It’s going to continue to evolve and we’re going to continue to reinforce the value of that bundle over time.”

Staggs also said he was confident that Disney’s programming services—including ESPN—would continue to thrive. “They’re extremely valuable in the context of the existing platforms, but they’re also very attractive to any new entrants. And as the market evolves I think we’re going to continue to see new entrants,” he said. “We’re going to continue to see demand for our programming services and they will continue to be an important part of those services actually being successful in their launches. You look at the strength of our brands and our programming and we feel very good about where we sit.”

ESPN in particular is valuable to consumers and distributors with its broad collection of sports rights, which drive live viewing.

ESPN has also built a multiplatform brand, he said. Last weekend, ESPN aired 48 college football games, most of which were only available through streaming on Watch ESPN. Viewership on ESPN’s digital platforms was up 60% for the weekend from a year ago and the number of devices accessing Watch ESPN was up more than 50%. Staggs added that multiplatform viewers also are among the heaviest users of linear TV. “People sometimes think of this as more of a zero sum game than appropriate,” he said.

Staggs said Disney would have a fluid approach to SVOD, with some content best served by remaining with in the current ecosystem and other content being monetized on new platforms.

“The growth of the SVOD players underscores the fact that high-quality programming is more in demand than ever and our ability to monetize our programming is greater than ever,” he said.

Asked about the possibility of Disney going over the top with its programming brands, Stagg said “in the foreseeable future I don’t see over the top being an outcome that’s going to happen.” He added that “to the extent that there’s opportunities to broaden reach through going over the top either in concert with the existing model or because the model shift, I feel just as good about the brands and programs we have to make sure that we can make that pivot if the need is there. I don’t see that soon.”

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.