ESPN could quit international markets
May 9, 2012
Disney has reported quarterly profit up by 21 per cent from a year earlier, to $1.14 billion. Revenue rose 6 per cent, to $9.6 billion. This despite a record $200 million write down on John Carter in the studio division and more losses at the games unit.
But amusement parks and TV networks, particularly ESPN, delivered strongly. The TV group experienced rare across-the-board health; operating income at the TV division increased 13 per cent, to $1.7 billion. The company’s cable nets — ESPN, Disney Channel, ABC Family, Disney XD — each had climbing ratings, increased ad sales or both. Disney’s local TV stations and ABC broadcast network saw a 37 per cent spike in operating income largely because of lower programming costs and higher ad revenue.
However, there was a cautionary note when Chairman & CEO Bob Iger warned that escalating rights costs may see ESPN back away from international markets. He said ESPN would stand by its News Corp JV in Asia and the pay networks in the UK, which hold limited Premier League rights,
“They’re going to continue to look at those opportunities with an eye toward determining whether they have the ability to grow or, in some cases, become profitable or, if not, potentially exit those markets. That’s not to say they we’re going to get out of international, but I think ESPN is likely to be selective about their presence there….. It’s tough going for them because they’re frequently competing with local or locally owned and controlled platform owners that are going after sports almost as loss leaders to drive subscriptions to their platforms…It’s kind of tough to be as aggressive buying live sports. So the opportunities for ESPN internationally, I think, are somewhat limited. Not to say that they don’t exist, but it’s never going to be a big part of ESPN’s business.”