Advanced Television

Disney Q3 up 22% despite ESPN losses

August 6, 2014

disney-frozenRising sports-rights costs caught up to ESPN in Q3, providing a setback in an otherwise strong quarter for The Walt Disney Company.

Hit by a combination of higher costs for World Cup football and MLB , as well as a shrinking subscriber base for ESPN and certain timing issues, operating income at Disney’s cable networks group fell 7 per cent to $1.9 billion during the quarter ended June 28th. It was the only one of the company’s business units not to report double- digit, or higher, growth in operating income.

But “Frozen” DVD sales and price increases at theme parks and a turnaround at the interactive media unit, Disney generated higher earnings per share in the first three quarters of its fiscal 2014, which ends in September, than in any previous full fiscal year.

Net income in the quarter grew 22 per cent to $2.2 billion, and revenue was up 8 per cent to $12.5 billion.

Affiliate revenue – the money paid to Disney by cable and satellite companies to carry ESPN – grew in the mid-single- digit percentages last quarter, affected by contractual provisions. Such fees are a key driver of ESPN’s business.

Comparisons to the same quarter last year were hurt by nearly $100 million less in deferred revenue recognition as well as the sale last summer of ESPN’s UK business.

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