Disney's ESPN Subscriber Issue 'Exaggerated,' Analyst Says

Walt Disney Co

ESPN subscriber issue is "exaggerated," according analysts at JPMorgan. JPMorgan noted in a research note that 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 the ESPN subscriber concerns, JPMorgan's analysis highlighted that 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. 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. 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 on Thursday, November 5th. The company had reported $1.20 EPS for the quarter.