Disney Considers Marvel, Star Wars Subscription Services

Ad Revenue at the Company's Networks Declined During the Quarter

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Walt Disney is considering Disney-branded subscription services, including platforms for Star Wars, Marvel and ESPN, CEO Robert Iger said during the company's earnings call Tuesday evening.

"There is definitely an opportunity not just for ESPN, but for other Disney brands to openly put products in the marketplace that reach consumers directly," Mr. Iger said to Wall Street analysts. "We think we have that opportunity with Disney-branded service. We may have an opportunity to bring out a Marvel-type product and possibly even Star Wars."

Still, Mr. Iger said Disney is in no rush to move forward with any such products.

"But we also are mindful of the value of the expanded basic bundle to this company, and we do not believe that there is any reason for us to attempt to take out some of this product, particularly ESPN, quickly or right now. In other words, there's time," Mr. Iger said. "If we see that the market dynamics are changing in such a way that it's better for us as a company to take the product out directly, and to not only improve our margins by taking out the middleman but to create a closer relationship with the consumer that can be mined for other revenue-generating purposes, then we'll do that. But we think if we were to do that now, it would be somewhat precipitous of us, and there doesn't seem to be any reason to be that way."

Advertising revenue at Disney's TV networks declined during the quarter, with ESPN posting a 2% drop as ratings for certain programs were down compared to last year. But in the current quarter, ad sales at the sports giant are up 18% as a result of the College Football Playoffs.

Moving forward, the auto category could provide a boost for ESPN.

"There haven't been that many new car launches in the last number of months. I know that one of the big automotives just released results, which were quite positive. We think there's some real potential, particularly for ESPN in the automotive category, which has not been a hot category," Mr. Iger said. "If you watched the Super Bowl, there weren't that many automotive spots in the Super Bowl for instance. But that's an opportunity in the rest of the year for ESPN as car companies roll out more new models, which they haven't been doing."

At ABC, Jay Rasulo, senior exec-VP and chief financial officer said there hasn't been a radical change in the market from the previous quarters.

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