US media titans tangled up in cord cutting

Published Wed, Feb 10 20163:49 PM ESTUpdated Thu, Feb 11 201610:03 AM EST

Breakingviews

By Jennifer Saba

U.S. media titans keep tripping over cut cords. Healthy profits and outlooks from the likes of Walt Disney and Time Warner this week weren't enough to disentangle them. The steady payouts from cable and satellite operators are looking shakier. A digital reality of a la carte programming and video streaming is setting in. The Force should have been with Disney Chief Executive Bob Iger . "Star Wars" box-office, merchandise and video game sales helped the company generate record quarterly earnings of $2.9 billion. Even so, Iger couldn't escape growing concerns, which he himself first flagged last August, over Disney's juggernaut ESPN. Some 99 million subscribers in 2013 have declined to an admittedly still-impressive 90 million or so, according to Nielsen. Read More Four safe dividend stocks for turbulent times Iger found himself contending with aggressive Wall Street analysts Tuesday night. He said it was "ridiculous" to think the basic pay-TV bundle is waning. The numbers are hard to refute, though. Estimates suggest operating income at media networks fell 5 percent last quarter. And Disney's TV business suffered because of the high cost of sports programming. Time Warner boss Jeff Bewkes found himself similarly tripped up. Despite growing quarterly profit by a fifth and saying the company expects to generate more earnings per share this year than had been expected, investors fretted. Subscription revenue at HBO slowed in the fourth quarter compared to the third quarter. Time Warner last year created a breakaway digital version of the "Game of Thrones" network, but has signed up only 800,000 customers so far. More from Breakingviews : Wall Street risks becoming Uncle Sam's piggy bank The problems for a laggard like Viacom are more serious. The company faces pricing pressure from DirecTV, which was acquired by AT & T, and Dish. Alongside a 10 percent shrinkage in the bottom line from a year ago, Viacom expects to collect less from distributors that carry networks like MTV and Nickelodeon. That cost the company, which is grappling with a boardroom drama involving its biggest shareholder Sumner Redstone and his daughter, $3 billion in market value. There was a bit of solace from Comcast , which said last week it added 89,000 new video customers, a departure from the recent trend. At the same time, however, it added five times as many buyers of high-speed Internet service. For TV companies, those are the cords that bind. For more independent commentary and analysis from Reuters Breakingviews, visit breakingviews.com Disclosure: Comcast is the parent company of CNBC and CNBC.com.

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U.S. media titans keep tripping over cut cords. Healthy profits and outlooks from the likes of Walt Disney and Time Warner this week weren't enough to disentangle them.

The steady payouts from cable and satellite operators are looking shakier. A digital reality of a la carte programming and video streaming is setting in.

The Force should have been with Disney Chief Executive Bob Iger. "Star Wars" box-office, merchandise and video game sales helped the company generate record quarterly earnings of $2.9 billion.

Even so, Iger couldn't escape growing concerns, which he himself first flagged last August, over Disney's juggernaut ESPN. Some 99 million subscribers in 2013 have declined to an admittedly still-impressive 90 million or so, according to Nielsen.