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For Disney, the shift to video streaming is 'sobering,' top media analyst warns

  • The pay-TV industry is at an inflection point, Tuna Amobi tells CNBC.
  • "Obviously, ESPN is exposed," he says.
  • Disney is set to report second-quarter earnings after the market closes on Tuesday.

The pay-TV industry is at an inflection point, top media analyst Tuna Amobi told CNBC on Tuesday.

Amobi, senior media and entertainment analyst at CFRA Research, said this change is especially apparent at Disney's ESPN, which has struggled with continuing subscriber losses.

"The data that has come out in terms of the shift from traditional to nontraditional distribution is pretty sobering," Amobi said on "Squawk Box." "Obviously, ESPN is exposed. We're getting a lot more 'cord cutters' and 'cord nevers.'"

Amobi's comment came ahead of Disney's fiscal second-quarter earnings report after the market closes on Tuesday. Analysts expect the media giant to report earnings of $1.41 a share on revenue of $13.41 billion, according to FactSet.

Wall Street is paying close attention to Disney's media networks segment, whose operating income declined 4 percent from a year earlier in the January quarter, citing higher programming costs and lower advertising revenue at ESPN.

Late last month, ESPN announced it was laying off 100 people, including TV reporters, as it tries to evolve its content for a multiplatform audience.

Disney CEO and Chairman Bob Iger told CNBC in February after the company's first-quarter report that concerns about ESPN's subscriber losses are overblown.

"I think there's way too much pessimism about ESPN because ESPN is still in demand from three constituents you want to be in demand the most from," Iger said, referring to distributors, consumers and advertisers.

Amobi, who was named The Wall Street Journal's "Best of the Street," said the big question is when will ESPN's new changes make up for its subscriber losses?

"That's the biggest challenge I think they're going to try to mitigate," he said.