Disney CFO: Sports-free programming packages not hurting ESPN

Operating income at Disney's cable networks drops by $15 million in quarter ending Dec. 29
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While ESPN has lost about 500,000 subscribers in the last two years, Walt Disney Co. (NYSE: DIS) CFO Jay Rasulo told analysts Tuesday that the network isn't suffering from low-cost programming packages that a few major MSOs such as Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC) and Cox Communications are offering customers.

Jay Rasulo, Walt Disney Co.

Rasulo (Image source: Disney)

ESPN and ESPN2 counted 98.5 million subscribers in December, down about 500,000 compared to 2011, according to Sports Business Daily. Comcast, Time Warner Cable and Cox don't carry ESPN in their respective MyTV Choice, TV Essentials and TV Economy packages. But Rasulo told analysts on Disney's earnings call that operators may eventually be able to upsell subscribers that take the low-cost packages to broader tiers.

"We've not suffered an overall loss of subs because of what has perceived to be a growth of so-called cable lite packages. And the conversations that we've had with a couple of large cable operators very recently--they've actually suggested to us that they view these subs as saves, subs that they would lose completely, but they feel that they've been better off keeping them at a lower price," Rasulo said.

Increased spending by ESPN on NFL and college football rights saw Disney's cable networks division report a $15 million decrease in operating income for the quarter ending Dec. 29. Disney said operating income at its cable networks, which include Disney Channel, ABC Family, A&E Television Networks and its ESPN networks, dropped 2 percent to $952 million for its fiscal first quarter. Decreased income at ESPN was offset partially by higher affiliate revenue, according to Disney.

Disney said operating income from broadcasting, including ABC and its owned-and-operated stations, rose $36 million to $262 million during the quarter. The increase was driven by increased ad revenue from TV and online video programming.

Disney's media networks, which include both broadcast and cable networks, posted $5.1 billion in revenue in its fiscal first quarter, up 7 percent compared to this time last year. Disney posted $1.38 billion in net income, down 6 percent compared to last year. Diluted earnings per share fell 4 percent to 77 cents per share.

For more:
- see the release

Special Report: Cable in the fourth quarter of 2012

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