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Disney's ESPN Subscriber Numbers Concern May Be Overhyped

Disney's ESPN Subscriber Numbers Concern May Be Overhyped
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Walt Disney Co (NYSE: DIS)'s ESPN subscriber "issue" is "exaggerated," according to analysts at JPMorgan.

JPMorgan commented in a research note, "At ~17x our F2016E EPS compared to a forward multiple of ~22x in before the August earnings call we believe Disney shares are extremely attractive at these levels with the subscribers issue in particular exaggerated."

Despite Subscriber Weakness, Growth Is Likely In Other Areas

Despite the ESPN subscriber concerns, JPMorgan's analysis highlighted Disney's subscriber declines are currently at a rate of 2 percent each year across all of its networks, with "modest" revenues resulting from the company's ESPN OTT service expected to launch in 2018 and a 5 percent base advertising increase that is less attributable to lost linear subscribers on an equal advertising-to-subscriber basis.

Related Link: Disney's "Star Wars" Shift Could Impact Fox And Time Warner's 2017 Tentpoles

The firm indicated that the company's Cable Networks operating income is "likely to grow" in the mid-single-digit range with "broadly stable" margins.

The 'Star Wars' Impact

JPMorgan also commented that Disney's recent theatrical launch of "Star Wars" is a "profitable" franchise for the company, and also noted that its new opening of Shanghai Disney in June presents "great opportunity."

Walt Disney's quarterly earnings results were last issued on Thursday, November 5. The company had reported $1.20 EPS for the quarter.

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