Walt Disney reported fourth quarter earnings Thursday that matched Wall Street estimates, but the stock is down more than 5% Friday after revenues came up just short of expectations. Disney is a wildly diverse company with theme parks, movie studios, cruise ships, consumer products and the ABC TV network. But once again, cable networks were the driving force behind Disney’s earnings, responsible for 57% of the company’s total operating income. The cable channel doing most the heavy lifting for Disney is ESPN, which along with a contribution from the Disney Channel, generates more profits than the rest of Walt Disney combined.
Disney acquired Capital Cities/ABC in 1996 for $19 billion, which was the second largest takeover in U.S. history at the time. The majority of the deal revolved around the ABC network and its stations, which were valued at roughly $11 billion combined. Another component of CapCities was the expanding sports channel ESPN (this was pre-ESPN2, ESPNU, ESPN The Magazine, etc.).