Count Disney out of the group of studios angling to create a premium video-on-demand window that would empower the company to show new movies to home viewers before the end of the three-month period when theaters now show them exclusively.
The company is “not in conversations” with exhibitors to offer premium VOD, CEO Bob Iger told analysts in his quarterly earnings call. With Pixar, Marvel, and Star Wars, “the movies we make are perfect for consumption on the big screen. … What we’ve got going is working, and we have no reason to disrupt that.” Iger added, though, that he will “obviously watch developments.”
Analysts also quizzed Iger about what the company said was accelerating subscription losses at ESPN.
The CEO said the number of cord cutters and cord nevers — young people who form new households without subscribing to pay TV — is growing faster than ESPN is picking up new customers at streaming services such as DirecTV Now, Sling TV and YouTube TV.
“We’ve seen really nice growth, but it’s nascent,” Iger said.
In contrast to comments this morning from Discovery Communications CEO David Zaslav, who said consumers want a low-priced package without sports, Iger said, “Launching new platforms without ESPN is very challenged.”Iger scoffed at the idea Zaslav proposed that there could be a $10 bundle without sports.
“I don’t know how many channels you could fit into a $10 bundle, but I would imagine it wouldn’t be any channels that were particularly attractive,” Iger said. “I don’t see how that would be practical in terms of gaining much penetration.”
New digital services that include ESPN but still cost less than the traditional pay TV bundle are “more attractive to people in lower economic brackets,” and young consumers “want live sports.” As a result, he’s “optimistic about what we’re seeing.”
Asked about the drop in ratings for SportsCenter as fans find the latest scores on mobile devices, Iger said ESPN also is beefing up its mobile offerings. “The numbers have been tremendous.”
He added that company watchers made too much of ESPN’s recent decision to eliminate 100 positions.
“I don’t take it lightly,” he said. But it “wasn’t a particularly significant number or reduction” out of a staff of about 8,000.
CFO Christine McCarthy told analysts that ad sales for ESPN in the current quarter are “pacing down.” That reflects “the softness that we’re seeing in the overall advertising marketplace,” though she said there’s strong demand for NBA and other live sports.
She’s also “optimistic as we head into the upfront” TV ad sales market, selling impression across multiple Disney properties and platforms.
Iger took issue with a question about succession plans after his recent agreement to extend his contract by a year to 2019. This was the fourth time since 2011 that Disney has extended Iger’s term; each time the company said the changes would help prepare for a smooth succession.
“There’s been more made about our succession than it really deserves, suggesting that there’s been trouble in the succession front here,” he said.
Iger said “we had a smooth transition” when he took over. He’s staying because “I had a few more things I wanted to accomplish,” and it will create “more opportunities for people within this company as well. … We have enough time to not only consider the right candidates but to make the right decision and craft a handover of sorts or transition that should be successful.”
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