Can Anything Distract Disney Investors From ESPN Focus?

Few will fault Walt Disney Co DIS investors for holding cautious views of the company heading into its fiscal second-quarter earnings report on Tuesday.

According to Rosenblatt Securities' Alan Gould, one of the more notable drivers will be the incremental costs at Disney's ESPN unit stemming from three additional BCS (Football's Bowl Championship Series) games and the beginning of a new NBA contract, which frightened investors when it was announced in 2016.

As such, Gould believes investors and analysts alike will continue to focus more on ESPN although he suggested it's "unlikely" Disney will face the re-tiering challenges that other programmers are seeing.

Despite potential woes at ESPN, Gould's status as being viewed as a cable network company has shifted favorably to the creative content side.

Gould maintained a Neutral rating on Disney's stock with a price target boosted from $120 to $125.

Loop Capital: ESPN Layoffs In Focus

David Miller of Loop Capital Markets highlighted in a report that Disney's decision to let go more than 100 workers at ESPN, even some of its big-name on-air talent, is an area of concern.

Miller suggested investors should pay attention as to how the company will account for the layoffs in terms of charges against earnings. The analyst noted that since the layoffs were announced in April, it should be reflected in the company's fiscal third-quarter report in August. However, it's possible the company accrued for the layoffs in the March quarter and would recognize the costs on a GAAP basis in its Tuesday report.

At the end of the day, the ESPN layoffs are a result of both lower subscriber metrics and higher sports right costs.

Miller maintained a Neutral rating on Disney's stock with a price target lowered from $118 to $117.

See Also:

Television In The Snapchat Age: 'This Is The Way Of The Future'

Something You Don't See Every Day: The Bull Case For Disney's ESPN

Image: USAG- Humphreys, Flickr