For Disney, Declining TV Ratings And Stiff Competition At The Box Office Lay Ahead

While several local broadcasters have commented that political spend has been lighter than anticipated, Jefferies’ John Janedis pointed out that the core trends for Walt Disney Co DIS have been pacing below expectations.

Janedis maintained a Hold rating on the company, with a price target of $92.

Estimates Lowered

The analyst has lowered the FQ4 advertising estimates for Disney’s cable networks and broadcasting stations.

For cable Networks, Janedis believes that there could be risk to network advertising, given that ESPN rating have declined 20 percent quarter-to-date, due to weak MLB, SportsCenter and early NFL ratings.

“While NCAAF has been strong, there haven't been enough games to offset ESPN's other properties. As a result, we are lowering our F4Q reported cable net ad growth to -12 percent, which assumes underlying growth of -4 percent,” the analyst explained.

Related Link: Should You Own Disney?

The advertising estimate for broadcast stations has been lowered to reflect the weaker political spend and core trends.

The FQ4 EPS estimate has also been lowered from $1.12 to $1.11.

Tough Comps For Studio

“After a strong run fiscal YTD, DIS' Studio segment faces a tough comp in F4Q at the box office and home entertainment,” Janedis mentioned.

At the box office, the analyst noted that "Pete’s Dragon" and "BFG" were going up against "Ant-Man" in 2015, while in home entertainment, "Jungle Book" was expected to perform better than "Cinderella," although "Avengers" outperformed "Captain America 2."

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