Effect of finances on tiered pricing?

[mshanson3121]

So I was reading some financial news on Disney Corp. last night, they are supposed to release their Q1 report today. Experts were saying they didn't expect it to be that spectacular, that despite SWs success, stocks are down over 10%, and that they're struggling pretty hard with ESPN.

What effect does financial stuff like that, play in their decision to move to tiered?

 

[beer dave]

The low stock probably has a large impact in their decisions to raise pricing..... but moving to tiered is just a tool to attempt to hide raising prices.....think blue sky on an internal level.....

 

[mshanson3121]

My *guess* is that raised prices come fairly soon after the release today?

 

[larissawbb]

I bought my tickets but it is stressful trying to figure out the impact on future trips. If they are going to move to the stupid tiered tickets, I just wish they would get it over with.

 

[lockedoutlogic]

This...is what you need to watch. And their big problem with tinkering with prices.

They had a ridiculous, artificial climb last year and now are in danger of falling back to two years ago...the street hates that.

 

[Eoghann]

The thing is that while ESP will be a problem it's unlikely we'll see revenues drop like a stone, a gradual decline is far more likely. Which means the markets can continue to panic irrationally about this for years to come!

Stock price being as important as it is we'll see lots of desperate efforts to shore it up. They've already set aside money for stock buybacks. The biggest danger isn't to ticket prices it's to them suddenly pulling development budgets in order to buy extra stock back.

 

[cmash95]

actually cost overuns and low attendance at foreign parks hurt the stock more than espn right now. Espn is going to be around for a long time, now disney may sell it at some point and there are over a billion shares out there, disney needs to do a buy back but I think the first quarter earnings will come out ok.

 

[Eoghann]

actually cost overuns and low attendance at foreign parks hurt the stock more than espn right now. Espn is going to be around for a long time, now disney may sell it at some point and there are over a billion shares out there, disney needs to do a buy back but I think the first quarter earnings will come out ok.

Uhhh... ESPN has hurt Disney's stock prices in December and again in February (5% plus drops). It's going to be an ongoing pain point for them because ESPN is a far bigger revenue driver than Paris or Hong Kong have every been.

 

[Aurora0427]

Uhhh... ESPN has hurt Disney's stock prices in December and again in February (5% plus drops). It's going to be an ongoing pain point for them because ESPN is a far bigger revenue driver than Paris or Hong Kong have every been.

Why is ESPN such a drag on Disney stock? Is it no longer profitable? I'm a big sports fan, but I no longer have time to watch ESPN with two small kids running around. I have no idea if it's popular anymore.

 

[TheMaxRebo]

Why is ESPN such a drag on Disney stock? Is it no longer profitable? I'm a big sports fan, but I no longer have time to watch ESPN with two small kids running around. I have no idea if it's popular anymore.

It's largely do to people "cord cutting" and streaming what the want ala cart. The reason ESPN made so much money is it is part of the basic cable package and they got a big percentage of that. Now more people aren't getting that basic package and also pressure to remove it from the basic package to make that cheaper and then just people that specifically want it pay for it

 

[Eoghann]

Why is ESPN such a drag on Disney stock? Is it no longer profitable? I'm a big sports fan, but I no longer have time to watch ESPN with two small kids running around. I have no idea if it's popular anymore.

Oh it's still hugely profitable ($8 billion a year off 92 million subscribers), but revenue is down, subscriptions are down (7 million subscriptions lost int he last two years) and it's part of a continuing trend that will not change unless they find a new model. They are down 7.2 million subscribers in the last 4 years.

ESPN's massive revenue relies heavily on the fact it's in all the cable bundles so lots of people are paying for it who don't even want it. As alternative viewing models like streaming become more common and the packages get unbundled they will lose all that easy money. There are survey's showing as few as 15% of consumers would consider paying $20 a month to watch the service.

 

[lockedoutlogic]

actually cost overuns and low attendance at foreign parks hurt the stock more than espn right now. Espn is going to be around for a long time, now disney may sell it at some point and there are over a billion shares out there, disney needs to do a buy back but I think the first quarter earnings will come out ok.

You may be right...but epsn is what shaved a cool $20 off the stock price in a week in August and what analysts refer to at the top of Disneys list of "risks".

It's the optics of it...and a case where perception is reality.

ESPN cannot get what it's losing back in this marketplace. The writing is on the wall.

 

[lockedoutlogic]

Oh it's still hugely profitable ($8 billion a year off 92 million subscribers), but revenue is down, subscriptions are down (7 million subscriptions lost int he last two years) and it's part of a continuing trend that will not change unless they find a new model. They are down 7.2 million subscribers in the last 4 years.

ESPN's massive revenue relies heavily on the fact it's in all the cable bundles so lots of people are paying for it who don't even want it. As alternative viewing models like streaming become more common and the packages get unbundled they will lose all that easy money. There are survey's showing as few as 15% of consumers would consider paying $20 a month to watch the service.

There's other factors too...

One is the costs of paying for programming are going through the roof. The NBA alone is gonna cost Disney a fortune to run...and the worm has kinda turned on the NBA if we're honest.

Second is the NCAA and the pro sports leagues are starting to go straight to consumer and that is only gonna get worse...which is bad for the networks and good for the consumer. MLB has been incredibly successful with the MLB network and their streaming package...the others are going that way too.

The Dutch door on these things is that when you loose subscribers and pay more fees...advertising money starts to dry up. That and few people will tolerate commercials at all now. So the realty is they're losing free money from subscribers and free money from corporate sponsors.

I don't believe they can charge $25 a month for it...it is really crap programming.

They've already hit the iceberg...it's slow burn now.

 

[lockedoutlogic]

Why is ESPN such a drag on Disney stock? Is it no longer profitable? I'm a big sports fan, but I no longer have time to watch ESPN with two small kids running around. I have no idea if it's popular anymore.

I'm squarely in the middle of the Gen X demographic that put ESPN on the map...we watched roller derby and austrailian rules football when I was a kid and the station was never changed on the old crt tvs in high school/college off ESPN...

I'm also in the 2 kids model for the last 10 years or so and here's the reality:

Both you and I would watch ESPN still if it didn't suck. And it does. Even the shows they used to do well are bad now. They cater to the lowest IQ denominator...it's the F_X News of sports now.

We'd make the time if it didn't suck...to be honest...even if it was a half hour wind down each day. I honestly NEVER turn it on. It's as used as a vcr or a Sony Walkman these days.

 

[OKW Lover]

Part of the issue with Disney stock and the impact of ESPN on the price is that wall street is being somewhat irrational. Not that wall street is really rational anyway. They apparently are looking at the storm clouds so much that they lose track of the fundamentals - there are millions of people who love sports and would keep ESPN to feet their interest.

 

[lockedoutlogic]

Part of the issue with Disney stock and the impact of ESPN on the price is that wall street is being somewhat irrational. Not that wall street is really rational anyway. They apparently are looking at the storm clouds so much that they lose track of the fundamentals - there are millions of people who love sports and would keep ESPN to feet their interest.

I think that is the most "optimistic" take on espn I have seen. Even bob Iger doesn't agree with you.

Any decline in subscribers is a loss in nearly PURE profit. It all comes out of Disneys free cash - Which is why the ESPN model was so dangerous.

 

[Eoghann]

I think that is the most "optimistic" take on espn I have seen. Even bob Iger doesn't agree with you.

Any decline in subscribers is a loss in nearly PURE profit. It all comes out of Disneys free cash - Which is why the ESPN model was so dangerous.

I think I might agree with both of you. The decline is a loss in profit and the declines will continue. But... Wall Street is being irrational because ESPN remains highly profitable and will do for years to come. There's no good reason for crazy stock price fluctuations outside of the fact half the trades are done by computer now and brokers make Twitter posters look calm and rational.

 

[lockedoutlogic]

I think I might agree with both of you. The decline is a loss in profit and the declines will continue. But... Wall Street is being irrational because ESPN remains highly profitable and will do for years to come. There's no good reason for crazy stock price fluctuations outside of the fact half the trades are done by computer now and brokers make Twitter posters look calm and rational.

It's gonna continue to make money for awhile...but the numbers are gonna fall and the street is gonna keep banging them for it.

We have evidence of the future already...if they thought they had a model that worked - they wouldnt even acknowledge the subscriber loss.

If you know them - and I do - I'd bet the ranch that they already know they can't sell it for $25 standalone. It would be a fraction of the current subscribers who have no choice.

ESPN satisfies few fans "sports fix" like it once did. It's easier to go straight to the source now and avoid 18 hours of useless talking head commentary on 3 topics per day. That's all they do.

 

[cmash95]

actually disney dropped 20 dollars because of disney's exposure in china as much as espn. China's slowdown and the stock drop happened almost simultaneously and disney was over valued when it hit over $100.​

 

[rteetz]

actually disney dropped 20 dollars because of disney's exposure in china as much as espn. China's slowdown and the stock drop happened almost simultaneously and disney was over valued when it hit over $100.​

Everything I've seen is that Wall Street has been very worrisome about ESPN causing the drop. Not much of any mention both China.