UPDATED: Following CEO Bob Iger’s lead, Disney CFO Jay Rasulo won’t break out financial numbers for ESPN. But he strongly hints that its financial prospects are rosy by offering a few projections for Disney’s cable networks, which are dominated by ESPN. He tells investors to expect high single digit annual growth in revenues from pay TV distributors through 2016, and a similar growth rate for operating income. He’s confident about these projections because Disney has programming deals with eight of the 10 largest pay TV distributors, with the remaining two due by year end. In addition, most of its contracts with sports leagues last for years. The company won’t project ad sales but says ESPN has strong pricing power.
PREVIOUS, 11:06 AM: Disney’s dumping a lot of data about ESPN this afternoon to ease Wall Street fears that the company’s cash cow could face leaner times due its rising costs and new competition from channels led by Fox Sports 1. CEO Bob Iger kicked off today’s investor meeting in Bristol, Conn vowing that he’s “going to continue to invest” in ESPN which he sees as core to his strategy to build brands and franchises. Disney doesn’t break out financial numbers for the channel, but he noted that the company’s pay TV networks account for 32% of its revenues — and 56% of its operating income. President John Skipper and other ESPN execs say that the channel can continue to score: Few pay TV customers have cut the video cord, and those who opt out typically do so for financial reasons — not because they reject the programming. Execs add that ESPN has become a household name like Apple, Google, CocaCola, and Disney. Some 88% of Americans know ESPN, putting it ahead of the Olympics (83%) and Nike (81%). Even with new competition, the portfolio of channels including ESPN2 and ESPNews continues to grow. They say that ESPN is impervious to DVR ad skipping because 71% of its telecast hours are live and 96% of its viewing is live. That’s a contrast with the four major broadcast networks where 58% of their prime time programming is watched live. Execs also talked up ESPN’s reach on other media. Its Project Blueprint — which measures audiences on TV, radio, PCs, smartphone, and tablets — found that ESPN has an unduplicated reach of 191M adults, or 79% of the total, including 101M men or 86%. And on an average day ESPN Media reache 64M adults, including 36M men 18+. “It’s exploded the misconception that more platforms would cannibalize television,” says Artie Bulgrin, SVP Global Research and Analytics.
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