A Spirited Valentine ...

[ford91exploder]

Yes, that would be because Fantasyland appeals to the younger set. Amazingly, this means lots of toddlers around....shock horror!!

If ONLY there WERE children in strollers, I said 'Stroller Parking Lot' which is exactly what I meant, There are FAR more strollers than small fry in NFL and usually they are set up for an expedition into the jungles of Adventureland if the amount of food and gear attached is any indicator...

 

[ford91exploder]

Saw this in WSJ. Sorry it's so wrinkled, but I cannot find it on the internet:View attachment 213753 View attachment 213754
I'm not sure if someone has posted this.

FNC and CNBC both had segments today on Disney's massive subscriber losses on their Childrens channels in addition to the losses at ESPN and both highlighted Disney's utter lack of an internet/streaming strategy.

For kids the lack of a internet strategy may be more critical as the internet is the primary channel by which kids consume media and without Disney having a viable strategy they are losing mindshare among the youngest viewers which does not bode well for them being future Disney customers....

 

[brb1006]

Judging by internet hits, they should run all day long, on all their channels, a Spider-Man and Elsa Variety Show.

*Get's Awful flashbacks to rather "questionable" Elsa and Spider-Man videos.*

And don't get me started with the very messed up "Youtube Kids Cartoon" channels or the infamous unlicensed online and app games that uses characters.

If you seriously want to know what I'm talking about check out SaberSpark's "Youtube Kids Cartoons" or Jontron's "Disney Bootleg Games" (Mainly near the end). But even looking up or seeing the thumbnails is giving me bad memories. I'm surprised Disney hadn't taken them down yet.

 

[brb1006]

Who or what is even making these cartoons?
Aliens trying to emulate human art?
Is the result of an experiment to create an artificial intelligence that knows Flash?
There's like a thousand of these things uploaded every day and they all get millions of hits. It's baffling.

I'm surprised Disney hadn't taken any of those videos down? Doesn't help that they are aimed at "Kids" even though the content isn't very kid friendly at all!

 

[Sonconato]

Yes, that would be because Fantasyland appeals to the younger set. Amazingly, this means lots of toddlers around....shock horror!!

You are correct that NFL does appeal to the younger crowd but the sea of strollers is not only there. We visit weekly and are shocked at the age of some of these stroller passengers. At least half of them should be transitioned out of their strollers. Many articles suggest this should begin at age 3.

 

[the.dreamfinder]

GotG Vol. 2 will be Disney's first title to be released on 4K Blu-ray.
https://facebook.com/jgunn/posts/10154381285796157

 

[HauntedMansionFLA]

FNC and CNBC both had segments today on Disney's massive subscriber losses on their Childrens channels in addition to the losses at ESPN and both highlighted Disney's utter lack of an internet/streaming strategy.

For kids the lack of a internet strategy may be more critical as the internet is the primary channel by which kids consume media and without Disney having a viable strategy they are losing mindshare among the youngest viewers which does not bode well for them being future Disney customers....

They have a great catalog to stream on line and do quite well month to month. DVD / Blu-ray is almost a dead technology. They should have tried to snatch up Netflix awhile back.

 

[GoofGoof]

My timeline is based on this based on current trend lines for subscriber loss ESPN goes negative sometime in 2019-2020 which is going to have it's own effects on DIS stock.

Right now according to @ParentsOf4 Disney is spending about half of its free cash flow on its buyback program. What happens when there is no more profit from ESPN and rightsholders need their monthly check and the buybacks need funding?

Well kids it means that every 'non-essential' cash spend is immediately terminated and that means theme park and ship construction along with huge cuts in the theme parks. Because the two things that Iger will hold onto are the ESPN rights and the EPS inflation caused by the Buyback program

Disney's stock price is maintained largely because of its massive buyback program. While Disney's BRANDS are powerful Disney's business lets face it is lackluster in that top line growth barely outpaces the inflation rate. Now if Disney had kept that 55 billion in cash instead of blowing it on buybacks Disney would be in the catbird seat as they could weather ESPN becoming temporarily unproductive or using the cash to fund acquisition of a distribution network.

Instead Disney is sitting on a heap of treasury shares and 2-3 months worth of cash. The value of the treasury shares could be wiped out overnight should the market turn negative on media in general or Disney specifically

And that's where I get my opinion that there will be a years long delay in WDW SWL opening relative to DL SWL. The other question of course will there even BE a recognizable TWDC by that time. Yes the parks will be there but who will they be owned by then?

Star Wars Land will be open in FL long before ESPN goes negative. Even the most pessimistic analysts are looking at 2021 (at the earliest) as the year ESPN could go negative. That's also the year that the Monday Night Football contract expires which is over 25% of ESPNs costs. It will be interesting to see if they bid on renewing it and how much they bid. The NBA deal is almost as large and unfortunately runs through 2025. It was a bad deal when it was signed and they (and TNT) are stuck with it. The MLB contract is the next largest and is up in 2020. Those 3 combined make up almost 60% of ESPNs costs. My guess is these contracts will not be renewed at rates anywhere near as high as they currently are given ESPNs issues and the fact that other networks are facing similar issues with declining viewers. It's going to take a while to get things straightened out though.

Why isn't this as bad as it seems? The decline is already built into the stock price. It's not like analysts don't know what's going on. Could cord cutting increase faster than analysts expect? Yes, but it could also slow down too. Either way the bloated rights contracts will roll off in the medium term and give ESPN an opportunity to right the ship.

One other factor you don't address is that cash is real cheap to borrow when you are TWDC. If they actually needed cash (which they don't right now) they could borrow it, lots of it. TWDC has almost no debt and could easily afford to borrow cash if they really needed to in order to get past a few rough years.

 

[Cosmic Commando]

Star Wars Land will be open in FL long before ESPN goes negative. Even the most pessimistic analysts are looking at 2021 (at the earliest) as the year ESPN could go negative. That's also the year that the Monday Night Football contract expires which is over 25% of ESPNs costs. It will be interesting to see if they bid on renewing it and how much they bid. The NBA deal is almost as large and unfortunately runs through 2025. It was a bad deal when it was signed and they (and TNT) are stuck with it. The MLB contract is the next largest and is up in 2020. Those 3 combined make up almost 60% of ESPNs costs. My guess is these contracts will not be renewed at rates anywhere near as high as they currently are given ESPNs issues and the fact that other networks are facing similar issues with declining viewers. It's going to take a while to get things straightened out though.

Why isn't this as bad as it seems? The decline is already built into the stock price. It's not like analysts don't know what's going on. Could cord cutting increase faster than analysts expect? Yes, but it could also slow down too. Either way the bloated rights contracts will roll off in the medium term and give ESPN an opportunity to right the ship.

One other factor you don't address is that cash is real cheap to borrow when you are TWDC. If they actually needed cash (which they don't right now) they could borrow it, lots of it. TWDC has almost no debt and could easily afford to borrow cash if they really needed to in order to get past a few rough years.

THANK YOU. In order for the sports leagues to get those giant TV deals, somebody has to be able to turn their content into advertising dollars. It's not as if ESPN is actually being surpassed by FS1 or NBCSN or games streaming on Twitter. They're paying more than they should for their content, because they're locked into contracts for varying lengths of time. ESPN is still ESPN (for now); they're still the biggest fish in the sports pond. I think it's funny that a lot of the coverage sort of seems to be blaming ESPN, but doesn't connect the dots that the sports leagues are probably going to have to tighten their belts in 5-10 years.

 

[GoofGoof]

THANK YOU. In order for the sports leagues to get those giant TV deals, somebody has to be able to turn their content into advertising dollars. It's not as if ESPN is actually being surpassed by FS1 or NBCSN or games streaming on Twitter. They're paying more than they should for their content, because they're locked into contracts for varying lengths of time. ESPN is still ESPN (for now); they're still the biggest fish in the sports pond. I think it's funny that a lot of the coverage sort of seems to be blaming ESPN, but doesn't connect the dots that the sports leagues are probably going to have to tighten their belts in 5-10 years.

There's a reason why the NBA league minimum salary is up over $1M on average. The sports leagues are benefiting greatly from these contracts. Keep in mind though that ESPN is to blame for signing these bad contracts. The NBA deal in particular was really foolish. They were negotiating against themselves mostly and ended up with a terrible long term deal. If it was re-negotiated today the league would probably get 1/3 what they got a few years ago.

 

[ford91exploder]

THANK YOU. In order for the sports leagues to get those giant TV deals, somebody has to be able to turn their content into advertising dollars. It's not as if ESPN is actually being surpassed by FS1 or NBCSN or games streaming on Twitter. They're paying more than they should for their content, because they're locked into contracts for varying lengths of time. ESPN is still ESPN (for now); they're still the biggest fish in the sports pond. I think it's funny that a lot of the coverage sort of seems to be blaming ESPN, but doesn't connect the dots that the sports leagues are probably going to have to tighten their belts in 5-10 years.

Make that 3-5 years as study after study has shown only about 15-20 percent of the potential audience is willing to pay 8 bucks for ESPN, Yet at current levels that content will cost 22-25 bucks and only 5-7 pct of ESPN audience is willing to pay that much

I'd really love for pro-sports to go back to the 60's model where the athletes needed a job in the off season.

The takeaway is that pro sports will be on a diet shortly

 

[ford91exploder]

There's a reason why the NBA league minimum salary is up over $1M on average. The sports leagues are benefiting greatly from these contracts. Keep in mind though that ESPN is to blame for signing these bad contracts. The NBA deal in particular was really foolish. They were negotiating against themselves mostly and ended up with a terrible long term deal. If it was re-negotiated today the league would probably get 1/3 what they got a few years ago.

ESPN's rights deals are ego driven not reality driven its fun to watch ESPN bid against themselves. Its less fun though thinking about the long term damsge to the company as a result

 

[asianway]

Stock repurchases are NOT inherently bad, However the way Disney is doing them violates BOTH of Warren Buffet's rules on stock repurchases and is more reminiscent of Netflix and Sears.

Right now WDW itself according to ParentsOf4 has a net investment deficit of 2.8 Billion over Iger's term, So just to break even Disney would need to spend 2.8 Billion for which Disney has the cash (if it was not being spent on stock buybacks..) before spending dime one on growth. So when Disney crows about spending 3.5 billion in the next decade. My thought is yup another decade of stagnation and margin squeezing while Disney attempts to fight a under-investment forest fire with a few paper cups full of water.

Right now Disney is putting the cart before the horse they are adding resort capacity while not increasing park capacity by any meanignful amount, Even AFTER TSL/SWL DHS will have a lower guest capacity per day than before the 'expansion'.

That's an interesting statement on Studios Capacity. I think you're wrong if you factor in the third track at TSMM. I mean maybe if you counted the two theaters as theoretically running continuous shows 9-9 and the sheer square footage of the Streets to park bodies...

@RSoxNo1 whats your take?

 

[GoofGoof]

Make that 3-5 years as study after study has shown only about 15-20 percent of the potential audience is willing to pay 8 bucks for ESPN, Yet at current levels that content will cost 22-25 bucks and only 5-7 pct of ESPN audience is willing to pay that much

I'd really love for pro-sports to go back to the 60's model where the athletes needed a job in the off season.

The takeaway is that pro sports will be on a diet shortly

ESPN is over $7 now. I refuse to believe that if the price of ESPN went up less than a dollar (meaning your cable bill went up a buck or so) only 15-20% of current subscribers would keep ESPN. From 2008 to now the price went up from $3.65 to over $7 (almost doubled) but the number of subscribers only dropped by about 15%.

I could see a bigger drop off if it went to $22 to $25 but more than 5 to 7% of people would keep it. Think of all the bars and restaurants that can't be without ESPN. That has to account for 5% alone. If they triple the rate though they could afford to lose 2/3 of the subscribers and maintain an even profit. No growth, but also no loss. They would lose out on advertising money though.

 

[BrianLo]

Sorry if previously addressed....but are Themeparkinsider getting backhands off Universal? Their latest awards are a joke...Krakatau winning best rollercoaster?? Volcano Bay best new theme park?? (Obviously didn't cross reference that one with tripadvisor, where it's still getting torn a new one)

I do enjoy reading it but this is all very suspicious.

The most dubious part is their starting the best new theme park category this year out of the blue.

 

[Frank the Tank]

ESPN is over $7 now. I refuse to believe that if the price of ESPN went up less than a dollar (meaning your cable bill went up a buck or so) only 15-20% of current subscribers would keep ESPN. From 2008 to now the price went up from $3.65 to over $7 (almost doubled) but the number of subscribers only dropped by about 15%.

I could see a bigger drop off if it went to $22 to $25 but more than 5 to 7% of people would keep it. Think of all the bars and restaurants that can't be without ESPN. That has to account for 5% alone. If they triple the rate though they could afford to lose 2/3 of the subscribers and maintain an even profit. No growth, but also no loss. They would lose out on advertising money though.

Here's the thing that everyone needs to keep in perspective about the value of sports: the reason why ESPN is able to charge $7 per sub in the first place is because of the dominant amount of live sports rights that they have in the stable. It's popular in the peanut gallery to state that ESPN supposedly paid "too much" for its current NFL and NBA contracts, but those are the types of properties (along with MLB and power conference college sports) that will allow ESPN to survive in whatever format is most profitable in 5 or 10 years from now.

Why? It's because sports combine two characteristics that don't exist in any other type of entertainment platform today: they're (a) watched live, meaning that sports are effectively the only programs on TV or anywhere else where people actually see commercials en masse as opposed to skipping them on DVRs or online and (b) exclusive, meaning that I *have* to watch ESPN (or another applicable rights holder) to see the game that I want, whereas virtually every other type of program can be accessed through multiple platforms at any time (whether on linear TV, streaming services like Netflix, Hulu or Amazon Prime or other over-the-top services).

The other factor is that there's still brand certainty in sports on TV (similar to the top movie franchises like Star Wars, Marvel, etc.). Even the most popular scripted shows on TV like Game of Thrones and Walking Dead have limited shelf lives. HBO is going to have to find new hits 5 years from now or else its value proposition goes down, which is easier said than done in an industry where there's no formula for creating hits. For however much the NFL or NBA rights might cost, those properties are virtually guaranteed to continue to draw ratings 5 or 10 years from now in a way that you couldn't even say for the biggest hits on TV.

So, contrary to popular belief, the expensive sports contracts aren't albatrosses for ESPN. Instead, those sports contracts pretty much make ESPN the only cable network that actually has options long-term since they have content that's live and exclusive in a way that can be sold in a variety of formats while still selling commercials. Everyone else has programming that is non-exclusive and can be watched 24/7 without commercials, so they're all commodities. People really need to look at the long game -- sports are really the only TV programming that's actually worth anything anymore (which is why ESPN was able to charge $7 per sub in the first place). The current cord cutting is certainly painful to Disney, but that's because ESPN was delivering *insane* profits for so many years (dwarfing the profits of any other Disney entity by a landslide) that the entire company was dependent on that gravy train (so they're all spooked that it has slowed down).

 

[GoofGoof]

Here's the thing that everyone needs to keep in perspective about the value of sports: the reason why ESPN is able to charge $7 per sub in the first place is because of the dominant amount of live sports rights that they have in the stable. It's popular in the peanut gallery to state that ESPN supposedly paid "too much" for its current NFL and NBA contracts, but those are the types of properties (along with MLB and power conference college sports) that will allow ESPN to survive in whatever format is most profitable in 5 or 10 years from now.

Why? It's because sports combine two characteristics that don't exist in any other type of entertainment platform today: they're (a) watched live, meaning that sports are effectively the only programs on TV or anywhere else where people actually see commercials en masse as opposed to skipping them on DVRs or online and (b) exclusive, meaning that I *have* to watch ESPN (or another applicable rights holder) to see the game that I want, whereas virtually every other type of program can be accessed through multiple platforms at any time (whether on linear TV, streaming services like Netflix, Hulu or Amazon Prime or other over-the-top services).

The other factor is that there's still brand certainty in sports on TV (similar to the top movie franchises like Star Wars, Marvel, etc.). Even the most popular scripted shows on TV like Game of Thrones and Walking Dead have limited shelf lives. HBO is going to have to find new hits 5 years from now or else its value proposition goes down, which is easier said than done in an industry where there's no formula for creating hits. For however much the NFL or NBA rights might cost, those properties are virtually guaranteed to continue to draw ratings 5 or 10 years from now in a way that you couldn't even say for the biggest hits on TV.

So, contrary to popular belief, the expensive sports contracts aren't albatrosses for ESPN. Instead, those sports contracts pretty much make ESPN the only cable network that actually has options long-term since they have content that's live and exclusive in a way that can be sold in a variety of formats while still selling commercials. Everyone else has programming that is non-exclusive and can be watched 24/7 without commercials, so they're all commodities. People really need to look at the long game -- sports are really the only TV programming that's actually worth anything anymore (which is why ESPN was able to charge $7 per sub in the first place). The current cord cutting is certainly painful to Disney, but that's because ESPN was delivering *insane* profits for so many years (dwarfing the profits of any other Disney entity by a landslide) that the entire company was dependent on that gravy train (so they're all spooked that it has slowed down).

I agree with most of this. One exception is the NBA deal. It was terrible. The previous contract hadn't expired yet so they didn't need to extend and it was the peak in the market. They were largely bidding against themselves. Hindsight is 20/20 but it was a bad contract. The MNF deal is what it is. NFL is king. They will need to extend it when it expires. The big question is will the price go up or down. The college football stuff is all pretty solid. People tend to discount the loyal following that college football has.

 

[ford91exploder]

ESPN is over $7 now. I refuse to believe that if the price of ESPN went up less than a dollar (meaning your cable bill went up a buck or so) only 15-20% of current subscribers would keep ESPN. From 2008 to now the price went up from $3.65 to over $7 (almost doubled) but the number of subscribers only dropped by about 15%.

I could see a bigger drop off if it went to $22 to $25 but more than 5 to 7% of people would keep it. Think of all the bars and restaurants that can't be without ESPN. That has to account for 5% alone. If they triple the rate though they could afford to lose 2/3 of the subscribers and maintain an even profit. No growth, but also no loss. They would lose out on advertising money though.

Respectfully multiple surveys like this one rank ESPN in the lower fifth of 'ala-carte' channel selections.

The problem ESPN has is that the MOST the hardcore sports fan is willing to pay is about 8 bucks ala carte yet it COSTS about 30 bucks to deliver that content if you assume the survey's uptake percentages are correct.

ESPN usually is dead last after The Weather Channel. Interestingly enough however ABC/CBS fight it out for the top spot in all the surveys as well so it's not all bad news for Disney.

From Fierce Cable

http://www.fiercecable.com/broadcas...desirable-a-la-carte-channels-tivo-study-says.

In an ala-carte world ESPN will probably have 10-20 million subscribers which is a far cry from the 112 million they had at one time and they are going to have a hard time raising revenue as well because in the theoretical ala-carte bundle of 20 channels the best price point ESPN could manage was 1.82/Month

As to college sports I think you will find the colleges will 'dis-intermediary' themselves and offer their own streaming programs so they get ALL the revenue from airing their games. Maybe it will be conference based, maybe school based I don't know and I'm a bad one to ask on school sports because I simply don't care about sports except as a business.

 

[GoofGoof]

Respectfully multiple surveys like this one rank ESPN in the lower fifth of 'ala-carte' channel selections.

ESPN usually is dead last after The Weather Channel. Interestingly enough however ABC/CBS fight it out for the top spot in all the surveys as well so it's not all bad news for Disney.

From Fierce Cable

http://www.fiercecable.com/broadcas...desirable-a-la-carte-channels-tivo-study-says.

In an ala-carte world ESPN will probably have 10-20 million subscribers which is a far cry from the 112 million they had at one time and they are going to have a hard time raising revenue as well because in the theoretical ala-carte bundle of 20 channels the best price point ESPN could manage was 1.82/Month

It's unrealistic. None of those networks could survive if the world went ala-carte and their prices stayed the same. If you lose a large portion of your customers you would have no choice but to dramatically increase prices to maintain revenue. Asking people which networks they would choose at today's prices for a bundle will always skew towards the cheaper networks. That still doesn't mean people don't want ESPN or won't pay for it.

 

[Frank the Tank]

I agree with most of this. One exception is the NBA deal. It was terrible. The previous contract hadn't expired yet so they didn't need to extend and it was the peak in the market. They were largely bidding against themselves. Hindsight is 20/20 but it was a bad contract. The MNF deal is what it is. NFL is king. They will need to extend it when it expires. The big question is will the price go up or down. The college football stuff is all pretty solid. People tend to discount the loyal following that college football has.

I think ESPN ended up paying market price for the NBA. Note that Turner paid the same amount to renew the NBA, too, so it wasn't as if ESPN was alone in determining that value. Fox was legitimately looking to pay even more for the NBA if they went to the open market, which is why ESPN and Turner were willing to pay so much for a renewal. If you're looking at sports other than the NFL (which I agree is in a category by itself), the NBA is really the most valuable sports property at this point (as they get great age 18-34 and 18-49 ratings compared to MLB and college football, which are the ratings that get very large ad premiums). In essence, even if MLB and college football games get higher total ratings compared to the NBA in certain metrics, a network can still charge more for NBA ad slots due to higher ratings in the more valuable younger demo (and I say that as someone that writes a college football blog). So, I look at it as the NBA is getting paid accordingly: they're the 2nd most valuable sports entity in the US today (after the NFL) in terms of the ratings demographic that advertisers pay the most for, so they're getting the 2nd highest TV rights contract. The numbers really aren't as crazy as it looks right now (and it will likely look cheap by the end of the contract).