ESPN Boss John Skipper ‘Happy to Be in Crosshair’ of Disney’s Earnings Miss

“We think we still have a little swagger,” company president says

Last Updated: May 17, 2016 @ 11:12 AM

ESPN president John Skipper isn’t afraid to be at the center of investor discussions about Disney’s rare earnings miss for the second quarter of 2016.

“The Walt Disney Company released their 11th straight quarter of double-digit earnings last week. I’ll be happy to be in the crosshair of that,” Skipper told reporters following ESPN’s Upfront presentation on Tuesday in New York City. “The media networks contributed mightily to that.”

A decline in ESPN subscribers hurt the company, but Skipper is optimistic about the network’s future.

“We’re quite encouraged by many of the conversations we’re having with new distributors, over the top distributors and new packages. We’re got some real, we think, traction with Sony and Sling and other distributors,” Skipper said. “We’ve said repeatedly, we like our hand. You saw today. We think we still have a little swagger.”

Part of the positivity is based on Nielsen adding Out of Home viewers to its ratings, which should significantly help ESPN because its live sporting events are often consumed at sports bars and in other group settings.

“In many cases, for many of our shows, it will add double-digit increases to our audience,” Skipper said.

Nielsen is targeting 2017 for the OOH addition. Skipper said advertisers will realize that OOH viewers will be just as valuable as traditional viewers.

Overall, Disney’s profit rose 2 percent to $2.1 billion on a 4.1 percent revenue climb to about $13 billion in Q2. But its adjusted earnings per share, at $1.36, fell short of the $1.40 average estimate of Wall Street analysts.

CEO Bob Iger said in August that the network had modest subscriber losses, comments that spurred a wide sell-off in television companies’ stocks, feeding into fears about cord cutting. In February, Iger reassured Wall Street that ESPN subscribers were increasing again, and Disney shares have climbed about 19 percent since then.

But last week, Disney’s television division saw revenue slip 0.3 percent amid a drop in ESPN subscribers. Disney compensated for the weak revenue with cost savings, to post a 9 percent increase in the unit’s operating profit.

ESPN lowered its programming costs and enjoyed higher affiliate revenues, but both subscribers and ad revenue at those networks dropped. The TV unit, called media networks, is the company’s biggest by both revenue and profit, and ESPN is the powerhouse of that unit. Timing of college football games made year-earlier comparisons hard to gauge in the latest period.

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