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Disney turns to internet TV as ratings sag

The Walt Disney Co. once resisted offering channels like ESPN directly over the internet, preferring old-fashioned cable subscriptions. Its investors are fretting over ratings as more people cut the cord and cancel cable or satellite service. NFL game viewership is also down, and the contentious election drew viewers away from Disney networks like ABC to cable news networks.

Disney stock was down 9.6 percent for the year, at Thursday’s closing. But despite a weaker-than-expected earnings report, which showed a drop in ESPN revenue, shares rose more than 2 percent late Thursday after an initial dip in extended trading.

The media conglomerate, which owns Marvel, Star Wars and its own Pixar and Disney Studios, is forging ahead with new streaming deals involving Netflix, Hulu and others.

“Disney is the one media company that can succeed in taking its brands directly to consumers,” said Nomura analyst Anthony DiClemente. He expects Disney could one day offer ESPN as a stand-alone service, for example, similar to HBO’s US$15-a-month “HBO Now.”

Burbank, California-based Disney hasn’t gone that far yet. But last quarter it took a US$1 billion stake in BAMTech, which provides streaming for Major League Baseball. The company said it plans to use that technology to offer an ESPN streaming service that offers live game streaming and programming not offered on regular ESPN.

The BAMTech deal is a “great way for us to move ESPN and probably other Disney assets into digital, mobile platforms in a more effective way,” Disney CEO Bob Iger said at a Goldman Sachs conference in New York in September. It’s also a way for Disney to learn more about its viewers for advertising purposes, he told analysts on a conference call Thursday.