With the investment world anxiously listening in, The Walt Disney Co. did not provide much additional information on the loss of subscribers at ESPN that sent media stocks into a tailspin last quarter, but it did say it was looking at new ways to get its content to consumers.
Disney CEO Bob Iger, speaking on the company’s fourth-quarter earnings call with analysts, reiterated that ESPN was a healthy business and that that the market shouldn’t have panicked over the candid way he described the situation in August.
“There’s nothing about that I would retract or change. We updated our guidance we’d given in 2014 about ESPN sub fees … that guidance holds today, Iger said. “We feel there should be no reason to panic over comments like that.”
Iger said that a decline in subscribers would slow affiliate revenue growth. In its fourth quarter earnings release, subscriber revenue was boosted by the launch of the SEC Network, but Disney did not specifically address ESPN’s sub count.
“What we’re seeing is consistent with what we talked about last quarter,” added COO Tom Staggs on the call.
Iger said that Disney was looking for new ways to get its content to viewers and that it was uniquely positioned to go direct to consumers. He highlighted Disney Life, a subscription service launching later this month in the U.K. that will offer movies, TV shows, music and other content. It features an interactive, intuitive interface and can be personalized and offer content in seven languages.
“It speaks to where we’re going as a company,” said Iger, adding that similar products would work for the company with its other brands in other markets.
Iger said that technology has created more competition for people time, but “we have an opportunity to distribute our content in more different ways than we ever had before.” He called that “a silver lining, a glass half-full perspective.”
He said that to be successful media product need quality content, a fantastic interface that’s easy to use and makes content easy to find and mobility. He added that new platforms, such as Sony’s VUE could not be successful without content with companies like Disney.
Iger said he liked the app-based experience. “We’re looking at a number of new opportunities to distribute our content,” but that would augment what is still the primary form of TV distribution, which is the multichannel bundle.
And while a Disney Life-like product is possible in other markets, Iger said the company would not be “rushing into that right now.”
Staggs said the ESPN brand is stronger than ever, and that it would continue to innovate.
ESPN laid off about 300 staffers last month, which had analysts questioning the sports network's health. Iger and Staggs denied a theory that ESPN had laid people off to be able to pay for more sports rights and a report that its affiliate deals had aimed for high fees, but left it vulnerable to being left out of skinnier bundles.
Staggs said the layoffs were a sign that ESPN was looking to be effective and efficient as it moves forward. “ESPN has been innovating all along and they’re going to continue to do so and that affects how they staff,” he said.
Iger also addressed the company’s relationship with SVOD companies like Netflix, which some say have been draining viewers from traditional TV. Iger said that Disney is doing a lot of business with Netflix now, but it will stay flexible.
“If we see its doing damage long term, we’ll cut back,” he said. “Multichannel is still a huge driver of value.” Instead of selling shows in early windows to SVOD, he said he could see instead off-net programs being bundled with the channels they were originally as a feature offered to multichannel subscriber to perpetuate that business model and make it more consumer friendly.
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