What's going on?

Disney, the iconic media and entertainment company, had some disappointing news for investors on Tuesday as the company made less revenue than expected.

What does this mean?

Investors knew Disney wouldn�t make as much money on merchandise (e.g. licensing its brands to toy companies) in its most recent quarter versus a year ago, but it made even less than expected. Last year, the new Star Wars movie, The Force Awakens, was released and, combined with Disney�s popular Frozen franchise, led to lots of toys being sold. Disney couldn�t keep pace with that this year.


Perhaps more importantly, revenue at its biggest division, Cable Networks, declined because of its sports franchise ESPN. It appears that fewer people are prepared to pay a monthly subscription fee for ESPN channels. Also, viewers are declining even for holiday college football, which is a meaningful business for Disney.

Why should I care?

The bigger picture: Live sports may be becoming a much less valuable commodity. (tweet this)

Live sports used to be considered immune to challenges faced by other media entities: the theory was that people would still pay to tune in to watch sports live. That might be changing, though. The young male demographic, traditionally one of the biggest viewers of live sports, may no longer find 3-hour games appealing in a world of full of other media choices (too busy Snapping?).


For the stock: Disney has some inherent strengths � investors just want to know how it will utilize them to turn itself around.

Disney has one of the strongest brands in the world and monetizes it with toy licensing, theme parks and other initiatives. It also has a well respected CEO that the Wall Street Journal reported last week is due to stick around for longer than expected. It even has a potential solution to its sports problem, which involves streaming live sports. It�s just not clear yet if it can pool all those strengths into a successful plan for the future.