Disney tops 4th-quarter earnings expectations with pay TV beat

LOS ANGELES, Calif. – Disney is allaying concerns about cord-cutting after reporting better-than-expected revenue in the cable-network division that houses ESPN.

CEO Bob Iger told CNBC that he remains “bullish” about the TV business. Three months earlier, Disney set off a wave of selling in media stocks after trimming its future guidance due to a modest decrease in ESPN subscribers. Last month, Disney cut about 300 jobs at ESPN and shuttered its popular Grantland website.

“The fact remains that the industry did lose some (subscribers) last year,” he told CNBC. “Now is that a reason to panic? Absolutely not. People still love television, the still love ESPN and they love live sports.”

Thursday’s comments come the same day Disney announced it is licensing ESPN and other channels to Sony’s PlayStation Vue online TV service, a bundle of over 50 channels that is still smaller than most traditional pay TV packages and costs $50 a month.

Iger told analysts on a conference call that Disney would continue to license its top networks to new entrants with slimmer bundles of channels that are more attractively priced to young people. He also said ESPN remains a key driver of the popularity of new offerings, including Vue.

“They came to us to negotiate a deal because it was clear the product that they had launched was not penetrating the market as much as I think they were expecting,” he said.

Disney said Thursday that revenue at its leading business, cable networks, rose 12 per cent to $4.25 billion in the fiscal fourth quarter, beating the $4.22 billion expected by analysts polled by FactSet. An increase in subscribers at its newly launched SEC Network partially offset a decline “at certain of our networks,” the company said, without specifying.

Overall, revenue rose 9 per cent to $13.51 billion, shy of the $13.55 billion expected. But adjusted earnings grew to $1.20 per share from 89 cents a year ago, beating the $1.15 expected.

Shares of Walt Disney Co., which is based in Burbank, California, were down 10 cents at $112.90 in after-hours trading. That’s still about 7 per cent below the close immediately before last quarter’s earnings call set off a pullback in media sector stocks.