One Wall Street analyst, Kannan Venkateshwar of Barclays, has downgraded shares of Disney from “Equal Weight” to “Underweight.” Venkateshwar argues that Disney investors can't ignore Disney’s struggling sports network, ESPN. The network is the most expensive network for carriers to broadcast -- and unbundling threatens the franchise.
Venkateshwar wrote: “…ESPN's business model depends on the cross subsidy of the pay TV bundle. Consequently, given ESPN's fixed cost structure and variable revenue model, subscriber losses are likely to have a disproportionate impact on the business model.” The Barclays analyst also points out Disney's strengths including its Star Wars franchise.
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