Disney CEO Robert Iger May Extend Tenure Again

Few believe internal executives are poised to ascend and contend it would be tough for an outsider to take over in less than 16 months

Feb. 6, 2017

With 16 months until his planned retirement and no successor in sight, Walt Disney Co. Chief Executive Robert Iger may extend his tenure for a third time, according to people close to the company.

Since former chief operating officer and presumed Iger successor Tom Staggs departed last spring, Disney’s board has made no public comments about its progress or process to find a new CEO.

Inside Disney, few think any executives are currently poised to ascend. There also is a widespread belief that it would be difficult for an outsider to get their hands around the world’s largest media conglomerate in less than a year and a half.

“The prevailing theory is that Bob will have to extend to train his replacement,” said one Disney executive. “There will be a steep learning curve for whoever comes in and no one believes Bob or the board wants to set someone up to fail.”

A further extension of Mr. Iger’s tenure may be discussed March 3, when Disney holds its annual shareholder meeting, and its directors typically meet. March also will mark a year since Mr. Staggs decided to leave after learning Mr. Iger, who also is chairman, and the rest of the board had lost confidence in him, according to people with knowledge of his departure.

Mr. Iger originally was scheduled to step down as CEO in 2015, after 10 years on the job, and then in 2016. When his exit was pushed back again to June 2018 just more than two years ago, he said “this time I really mean it” and has since given no indication he has changed his mind.Mr.

Staggs was named COO in February 2015, giving him three years to prepare for the CEO role after 26 years at Disney. Another potential successor, Jay Rasulo, left following Mr. Staggs’s promotion.

Last June, Disney directors considered retaining a major executive-search firm for help finding a new leader but ended up not doing so, according to people with knowledge of the talks. The company hasn't said whether it has since retained a search firm.

The list of outside media executives seemingly prepared to replace Mr. Iger on short notice is slim, and includes Steve Burke, CEO of Comcast Corp.’s NBCUniversal, and Peter Chernin, a former News Corp president who is now a producer and digital media investor. It is unclear whether either would be interested. Both declined to comment through their spokesmen.

Another option could be to look to the technology world, as the lines have blurred between that industry and media. Among the few possible candidates with relevant experience are Facebook Inc. COO Sheryl Sandberg, who is on the Disney board. Ms. Sandberg declined to comment through a spokeswoman.

It is possible Mr. Iger could step down as CEO on the current timetable but remain as chairman to help guide a new leader, a scenario envisioned in one of his earlier contracts.

Whoever is running the company in 16 months will face a mounting set of challenges in Disney’s television business, as the company grapples with how aggressively to offer its ESPN and other channels directly to consumers via the internet.

Questions about the growth of ESPN and other networks were a drag on Disney’s share price for more than a year, beginning in August 2015. Recently the stock has been on an upswing, gaining about 19% since November. It was trading at $110.30 a share on Friday.

Analysts, however, remain divided about how big a problem slowing ESPN growth will be and how to weigh that against other factors, such as a promising slate of movies in fiscal 2018 that includes four Marvel and two Star Wars films.

Disney earnings: Questions over the state and future of ESPN linger

Feb. 6, 2017

Walt Disney Co. will deliver its fiscal first-quarter earnings results after the market opens on Tuesday.

Here’s what investors can expect:

Earnings:

Disney is expected to report per-share earnings of $1.50 for the quarter, according to analysts surveyed by FactSet. That would be an 8% decline compared with the same quarter a year ago, but an increase of 36% compared to Disney’s most recent fourth-quarter 2016 earnings. Disney has beat FactSet’s consensus on earnings in eight of the last 10 quarters.

Estimize expects the media and entertainment company to report earnings of $1.51 per share.


Revenue:

Analysts covering the stock expect revenue for the quarter to hit $15.27 billion, according to FactSet. That would be a less than 1% increase compared with last year’s revenue during the same quarter, and a more than 16% increase compared with last quarter. Disney has beat FactSet’s revenue consensus in six of the last 10 quarters.

Estimize expects Disney to post revenue of $15.33 billion for the quarter.

The bulk of Disney’s revenue is likely to come from its media networks, which include cable and broadcasting. The segment is expected to contribute $5.88 billion, per FactSet. Parks and Resorts are the next biggest contributor to revenue, with $4.75 billion, followed by the $1.90 billion its studio business is forecast to add, and $1.43 billion from consumer products and interactive.


Other issues:

The big question mark for Disney is the same it’s been for just about every quarter in recent memory: What’s the state of ESPN?

The cable sports network was a drag on Disney’s most recent fourth-quarter earnings results, contributing to the company’s significant earnings miss. And Disney admitted that times are tough for the worldwide leader in sports.

Disney Chief Executive Bob Iger has insisted that ESPN will improve.

Analysts at Morgan Stanley, led by Benjamin Swinburne, recently upgraded Disney shares to overweight on the expectation ESPN revenue growth will improve from 2017 to 2020 and assist growth in earnings as well.

BMO Capital Markets analysts aren’t buying the ESPN turnaround.

“We believe the risk-reward skews negatively and we continue to see more negative data points than positive ones for ESPN, which we believe will remain the dominant theme for the stock,” wrote led analyst Daniel Salmon.

ESPN’s subscriber numbers, which are at the lowest point since 2005, typically get most of the attention, but Salmon wrote that the network faces other issues, including pricing increases, the changing nature of rights agreements and broader competition from tech companies for those rights.

The Walt Disney Company Reports First Quarter Earnings for Fiscal 2017

BURBANK, Calif.--(BUSINESS WIRE)--February 07, 2017--

The Walt Disney Company (NYSE: DIS) today reported quarterly earnings for its first fiscal quarter ended December 31, 2016. Diluted earnings per share (EPS) for the quarter decreased 10% to $1.55 from $1.73 in the prior-year quarter. The decrease was driven by a $0.13 per share gain in the prior year related to the Company's investment in A+E Television Networks. Excluding this gain and certain other items affecting comparability(1) , EPS for the quarter decreased 5% to $1.55 from $1.63 in the prior-year quarter.

"We're very pleased with our financial performance in the first quarter. Our Parks and Resorts delivered excellent results and, coming off a record year, our Studio had three global hits including our first billion-dollar film of fiscal 2017, Rogue One: A Star Wars Story," said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. "With our proven strategy and unparalleled collection of brands and franchises, we are extremely confident in our ability to continue to drive significant value over the long term."

The following table summarizes the first quarter results for fiscal 2017 and 2016 (in millions, except per share amounts):




SEGMENT RESULTS

The following table summarizes the first quarter segment operating results for fiscal 2017 and 2016 (in millions):



Media Networks

Media Networks revenues for the quarter decreased 2% to $6.2 billion and segment operating income decreased 4% to $1.4 billion.

The following table provides further detail of the Media Networks results (in millions):



Cable Networks

Cable Networks revenues for the quarter decreased 2% to $4.4 billion and operating income decreased 11% to $0.9 billion. The decrease in operating income was due to a decrease at ESPN.

The decrease at ESPN was due to higher programming costs and lower advertising revenue, partially offset by affiliate revenue growth. The programming cost increase was driven by contractual rate increases for NBA and NFL programming, partially offset by the shift in timing of College Football Playoff (CFP) bowl games relative to our fiscal quarter end. Six CFP games were aired in the first quarter of the prior year, whereas three CFP games were aired in the current quarter. Lower advertising revenue was due to lower impressions and rates, both of which were negatively impacted by the shift of CFP games. Lower impressions reflected a decrease in average viewership, partially offset by an increase in units delivered. Affiliate revenue growth was due to contractual rate increases, partially offset by a decline in subscribers.

Operating income at our other Cable networks was essentially flat as a decrease in income from program sales was offset by lower programming costs and higher affiliate fees. Affiliate revenue growth was due to contractual rate increases, partially offset by a decline in subscribers.

Walt Disney Pressured By Sagging ESPN Performance

Revenue for the fiscal first quarter came in below expectations

Feb. 7, 2017

Walt Disney Co. reported Tuesday that ESPN once again weighed on its business, as revenue for the fiscal first quarter came in below expectations.

During the three-month period ended Dec. 31, the entertainment giant had a runaway success with the latest installment of the Star Wars franchise, “Rogue One: A Star Wars Story.”

But the company’s cable operations were pressured by the performance of sports network ESPN amid declining advertising and shifting tastes as more consumers elect to cut cable out of their budgets.

For the quarter, revenue in Disney’s media networks segment, which includes its cable operations, decreased 2% to $6.23 billion and operating earnings fell 4% to $1.36 billion. Cable revenue declined 2% to $4.43 billion and operating profit fell 11% to $864 million amid declines at ESPN.

Over all, Walt Disney reported a profit of $2.48 billion, or $1.55 a share, down from $2.88 billion, or $1.73 a share, a year earlier. Excluding certain items, earnings remained at $1.55 down from $1.63 a year earlier. Revenue decreased 3% to $14.78 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.49 and revenue of $15.26 billion.

Walt Disney Increases Theme Park Ticket Prices

Feb. 11, 2017

Walt Disney Co. raised ticket prices at most of its domestic theme parks from 1.9 percent to 4.9 percent, more modest increases than last year when the company introduced higher fees on the most popular days.

The cost of a regular ticket to Disney’s Magic Kingdom theme park in Orlando, Florida, will rise to $115 from $110, the company said Saturday in an e-mailed statement. The $124 peak price at Magic Kingdom, which includes many summer days and holidays, is unchanged. Magic Kingdom is the world’s most attended theme park.

At Disneyland, in Anaheim, California, the regular, single-day ticket price rose by $5 to $110. The peak price at the company’s two parks there also reached $124. All of the changes go into effect on Sunday.

The company introduced three tiers of pricing at its domestic parks last year, with the cost of a ticket on the busiest days rising as much as 20 percent. Disney offers discounts on tickets purchased for multiple days. It also offers annual passes.

Prices for two of the highest levels of annual passes at Disneyland, the $849 Signature Passport, which excludes some days, and the $1,049 Signature Plus, which provides access every day of the year, are unchanged. Some multi-day options will decrease in price.

“Our pricing provides guests a range of options that allow us to better manage demand to maximize the guest experience and is reflective of the distinctly Disney offerings at all of our parks,” Suzi Brown, a spokeswoman for the Burbank, California-based company, said in an e-mail.

Theme parks were the only one of Disney’s four divisions to post an increase in profit last quarter. Operating income for the three-month period ending in December rose 13 percent to $1.1 billion, even though domestic attendance fell and the Orlando properties were closed for a day because of Hurricane Matthew. Domestic attendance slipped 5 percent in the December quarter and was down 1 percent in the fiscal year that ended Oct. 1.

Disney earnings: How do you solve a problem like ESPN?

May 8, 2017

Walt Disney Co. is set to report earnings for the fiscal second quarter after the market closes on Tuesday.

Here’s what investors can expect:

Earnings: Disney is expected to report per-share earnings of $1.41 for the quarter, according to analysts tracked by FactSet. That would be a 4% increase from the same period a year ago, but a 9% drop compared with the sequential first quarter. The media and entertainment giant has beat FactSet’s expectations in eight of the past 10 quarters.

Estimize, which crowdsources estimates from sell-side and buy-side analysts, hedge-fund managers, executives, academics and others, expects Disney to report earnings of $1.46 per share.

Revenue: Analysts surveyed by FactSet expect revenue to hit $13.41 billion. That is up more than 3% from a year ago, but down more than 9% from the first quarter. Disney as beat FactSet’s revenue consensus in five of its last 10 quarters.

Estimize expects Disney’s revenue to hit $13.51.


Disney’s main source of revenue is its media networks, which is expected to generate $5.99 billion during the quarter, led by cable and then broadcasting. Disney’s theme parks and resorts are expected to contribute $4.27 billion to overall revenue, followed by its film division at $1.99 billion and its consumer products and interactive segment at $1.17 billion.

ESPN is still very much under the microscope. The cable sports broadcaster is undergoing a reorganization in operations and content as it continues to struggle to find its footing in the changing media landscape that has introduced factions of cord-cutters, cord-shavers and cord-nevers.

Disney's cable business, which falls under its media and networks segment, reported operating income of $1.79 billion, missing Street expectations for about $1.85 billion, according to StreetAccount.

The company said the 3 percent year-over-year decrease in operating income was primarily driven by ESPN's higher programming costs. Disney said, however, that the decline was "partially offset by affiliate and advertising revenue growth."

The cable segment has typically brought in about 30 percent of Disney's total revenue. Late April, ESPN said it would lay off 100 people as the sports network cuts costs and adapts itself to digital distribution.

More Problems at ESPN

May 9, 2017

Late Tuesday afternoon Disney reported its quarterly earnings and according to the Journal, “ESPN once again dragged quarterly results with revenue for its fiscal second quarter coming in below analysts’ expectations.” The Journal notes that operating revenue within the Disney segment that includes ESPN contracted for the fifth time in six quarters. The Journal adds:

'American Idol' Returns to TV, This Time on ABC

May 9, 2017

ABC says it will revive "American Idol" after it has spent only one year off the air.

The network said Tuesday that the music-competition show, which dominated television in the 2000s and minted stars such as Carrie Underwood, Jennifer Hudson and Kelly Clarkson, will begin sometime in the next TV season. That season starts in September.

The series originally aired on Fox and was canceled a year ago after years of fading ratings. But ABC Entertainment President Channing Dungey called it a "pop culture staple that left the air too soon."

ABC left plenty of questions unanswered, including who will host and who will serve as judges. ABC recently hired "Idol's" old host, Ryan Seacrest, to be co-host with Kelly Ripa on the daytime talk show "Live With Kelly & Ryan."

Disney Shares Up Almost 2% On Report Verizon Is Eyeing Deal -- MarketWatch

July 3, 2017

Shares of Walt Disney Co. (DIS) climbed 1.7% Monday, after the New York Post said a rumor circulated last week that Verizon Communications Inc. (VZ) is eyeing a purchase of Disney. The paper cited an unnamed well-placed banker as saying not to count Verizon out. Verizon has just completed its acquisition of Yahoo Inc., and its rival AT&T Inc. (T) is in the midst of a deal for Time Warner Inc. (TWX).

Disney’s Channels: Children Are Tuning Out

Ratings have fallen sharply at the company’s youth-oriented networks amid the shift to digital viewing and a lack of hits

July 4, 2017

Walt Disney Co.’s biggest business, cable TV, is stalling. And the problems go well beyond ESPN.

The sports network’s struggle to adapt to a rapidly changing media landscape has garnered much of the attention from investors and analysts. Meanwhile, Nielsen data show ratings have fallen significantly at Disney’s biggest brands reaching children, teens and young adults, led by Disney Channel and Freeform.

Each of those two channels has lost about four million subscribers over the past three years, bringing them to about 90 million apiece, according to SNL Kagan, an industry consulting firm.

The troubles are twofold: a lack of hits and the broader move by audiences away from traditional television to digital alternatives. The shift to streaming services such as Netflix Inc. and web-based platforms like Google’s YouTube is particularly pronounced among younger viewers targeted by these Disney networks.

Other cable-programming giants are facing similar challenges. But the rising cost of sports content combined with younger viewers watching less traditional TV is particularly worrisome for Disney’s cable holdings. According to Nielsen, among people ages 2 through 34, prime-time viewing has dropped by 34% in the past five years.

Disney Channel executives said they are trying to improve programming and determine how aggressively to make the leap to mobile and online formats.

Disney Channel programming is focused on children, while Freeform, which changed its name from ABC Family in January 2016, is aimed at teenagers and young adults.

Cable TV has long been Disney’s biggest business, accounting for 30% of its revenue and 43% of profits last fiscal year, according to the company. About 26% of cable revenue and profits come from entertainment networks like Disney Channel and Freeform, Morgan Stanley estimates, while the rest is generated by ESPN. Disney doesn’t disclose the breakdown.

Even though Disney Channel is considered a relatively costly channel for cable companies, it doesn’t command the large subscription fees that ESPN does.

Also at stake for Disney is the exposure its TV channels offer for toys, clothes and other products that the company relies on for hundreds of millions of dollars annually in revenue.

As consumers “cut the cord,” Disney’s once fast-growing cable business has slowed down. According to the company, cable revenue was flat and operating income was down 6% in the first half of the current fiscal year. That has alarmed Wall Street.

Disney Chief Executive Robert Iger has said that strengthening online accessibility for television programs is a priority and that the company is preparing to offer its channels, in part or whole, directly to consumers online rather than just through costly cable television packages.

Profits for Disney Channel and Freeform are driven in part by long-term contracts with cable companies, but the erosion in ratings is likely to ultimately hit the bottom line unless the networks can generate substantial new digital revenue.

For the first six months of this year, the commercial-free Disney Channel’s ratings among its core 2-11 year old and 6-14 year old demographics fell 23% in prime time and 13% and 18%, respectively, during the full day, compared with the same period a year earlier, according to Nielsen. Ratings are also down at the smaller Disney Jr. and Disney XD networks, which fall under Mr. Marsh’s Disney Channel umbrella.

Making the transition to online and mobile platforms is a delicate dance. Distributors like Comcast Corp. and AT&T Inc.’s DirecTV pay high subscription fees that currently account for a large chunk of the Disney networks’ profits. Distributors have said they are wary of too much content being available outside of the pay-TV ecosystem.

Online video currently carries fewer ads and generates significantly less revenue than network programming, particularly if it is available to people who don’t subscribe to cable.

Freeform’s prime-time viewership among people ages 12-17 was down 25% from January through June, according to Nielsen. For the 18-34 year old demographic, the drop was 20% over the same period.

Disney earnings: Time to talk about ESPN again

Aug 7, 2017 7:12 a.m. ET

Once again, its time to talk about ESPN.

Since August 2015, when The Walt Disney Co. initially began bringing down forecasts for its cable channels amid fears of cord-cutting, ESPN has been a dimming example of the trend and a big part of earnings discussions. Investors have continued to focus on the premium sports network as subscribers have declined and ESPN has laid off prominent workers amid plans for an independent streaming service.

ESPN will be a focus again when Disney reports earnings Tuesday afternoon for its fiscal third quarter, which is a traditionally weak period for the media industry due to seasonal impacts. Heading into the quarterly earnings season, analysts anticipated the pay-TV industry would report the loss of more than 1 million subscribers.

Evercore analyst Vijay Jayant suspects that ESPN’s subscriber declines continued in the quarter, but said that would likely be offset by the launch of various virtual multichannel video programming distributors carrying ESPN, like Dish Network Corp.’s, SlingTV, Sony Corp.’s PlayStation Vue and AT&T Inc.’s DirecTV Now. Any positive impact from newer services, such as Alphabet Inc.’s YouTube TV and Hulu’s expansion into skinny bundles, should show effects in the following quarter, he said.

The costs of ESPN’s sports content will also be a big issue, as a big chunk of the company’s NBA rights fees will be recognized this quarter, according to Jayant. While he expects that ESPN likely controlled spending in other nonsports areas, cable networks revenue should see at least a 1% decline with operating revenue dropping more than 17%.

As ESPN is spending more on rights to air NBA games, it received fewer postseason games in the quarter due to the dominance of the two finalists, the Golden State Warriors and Cleveland Cavaliers, and the Warriors’ quick win in the NBA Finals. MarketWatch reported earlier that this may have cost Disney $130 million .

“[Disney] had guided to ESPN advertising revenue already trending down as of mid-May, before the tough NBA comps became evident,” Jayant wrote in a recent note to investors. “This could drive total reported cable network advertising to be down 8.5% this quarter.”


Earnings:

Disney is expected to report earnings of $1.55 per share during the quarter, according to analysts surveyed by FactSet. That would be a decline of more than 4% compared with the same quarter a year ago, but a 3% increase from the previous quarter. Disney has topped FactSet’s consensus on earnings in eight of the last 10 quarters.

Estimize expects Disney to report earnings of $1.57 per share.

Revenue:

Analysts expect Disney to report revenue of $14.46 billion, according to FactSet, which would be a slight increase compared with the prior year’s $14.28 billion in the same quarter, and up more than 8% from $13.34 in the most recent second quarter. Disney has missed FactSet’s revenue consensus in six of the last 10 quarters. Estimize contributors on average expect revenue to come in at $14.53 billion.

Disney’s media networks, including cable and broadcast properties, are expected to account for $5.93 billion in quarterly revenue, with the majority of that coming from cable. The media company’s theme parks and resorts business is expected contribute $4.83 billion in quarter, while its film studio adds $2.46 billion and consumer products contribute $1.23 billion.

TV’s Sports Problem

Amazon, Facebook, and Google could soon challenge the networks for big-time sports. And they’ve got deep, deep pockets.

Aug 5, 2017

Are you ready for some football? Amazon.com is. A few months ago, it agreed to pay the National Football League $50 million for streaming rights to 10 Thursday Night Football games starting on Sep. 28. That’s five times what Twitter paid for a similar deal last season.

For now, streaming is a mere sideshow to television in sports. The Thursday games will air simultaneously on the NFL Network, and on either CBS or NBC, which each pays $225 million a year for five of them. But Amazon’s encroachment should give media investors pause. Viewership trends in television are weak, and they’re worse without sports. Whereas TV networks own many of their scripted hits, they rent sports. Wisely, they have locked up rights for years to come, albeit at rich prices. As those rights come due, the networks could enter an unwinnable bidding war with Amazon, Facebook, and Alphabet.

“Winter is coming,” says New York University marketing professor Scott Galloway, borrowing a grim refrain from the HBO hit Game of Thrones. “The post-sports world will be ugly for television.”

Winter might already be here for cable networks that lack the programming might of the broadcast bigs. Last Monday, Discovery Communications, which owns the Discovery Channel and TLC networks, said it will buy HGTV and Food Network owner Scripps Networks Interactive for $11.9 billion. Both companies also reported disappointing financial results amid subscriber declines. “This deal combined with [second quarter] results suggests how tough the cable network business has become,” wrote Wells Fargo Securities analyst Marci Ryvicker. In a presentation, Discovery touted the combined company’s potential for cost savings and overseas expansion. But its shares finished the week down 11%, capping a 25% slide over two years. Scripps shareholders are getting a deal premium exceeding 30%.

Scripps and Discovery aren’t the only cable network operators facing challenges. Viacom, the owner of MTV, Comedy Central, and Paramount Pictures, beat earnings estimates, but reported a 2% dip in domestic ad revenue. Skittish investors pushed the shares down 14% Friday in response.

For now, the major broadcast networks — CBS; ABC, owned by Walt Disney; NBC, owned by Comcast; and Fox, owned by Twenty-First Century Fox — are better positioned than cable. As must-carry channels, they have negotiated for rising fees from cable operators, while raising prices for advertising, which is helping to offset declines in cable subscribers and ratings.

All have large in-house production operations that can create shows for the new crop of online streaming services. Some have fee-based streaming platforms of their own, or plans to launch them. Others are part of media conglomerates with a hand in theme parks, cable-TV distribution, and more. But the protective moat of the cable bundle is already weakening, and sports rights could be next. Before that happens, valuations for the group could come down to reflect the rising risk.

Sports are the biggest draw on television. Among last year’s 50 most-watched telecasts, 44 were football, basketball, baseball, or the Olympics. Sports viewers are also particularly attractive to advertisers. They skew young, and thus have plenty of years ahead to spend on their favorite brands, and they like to watch games live, which means they catch more commercials instead of zipping through them on their digital video recorders. TV networks have increased the number of hours devoted to sports by 160% since 2005.

At the same time, traditional television is losing its reach. Over the past five years, viewership among teens and young millennials (ages 18 to 24), including delayed viewing on DVRs, but not online streaming, has plummeted by more than 40%, according to Nielsen data. Among older millennials (25 to 34) and Gen Xers (35 to 49), it is down 28% and 13%, respectively. Only over-50s are sticking with their clickers.

Some of those lost younger viewers are watching traditional TV shows on new platforms, including smartphone apps for shows, networks, and cable carriers. But many are spending their screen time with services like Netflix, which now boasts more U.S. subscribers than all cable carriers combined. If TV networks are struggling to remain relevant, TV sets are not. As of March, according to Nielsen, 23% of U.S. households had an Amazon Fire TV, Apple TV, Chromecast, or Roku device for streaming movies and shows through their televisions, up from 19% in June 2016. Another 11% of households stream to their TVs using other devices, including smartphones and tablets; 29% own TVs with built-in apps for streaming; and 42% have videogame consoles that double as TV streaming devices.

Sports have not been immune to viewership declines, although one man has made recent trends difficult to read: Donald Trump. Football ratings tumbled leading up to Election Day, but stabilized afterward. Basketball ratings fell long after Election Day, although they were even with their level two years ago. Baseball was solid. Trump’s antics seem to have made news more intriguing than sports at times, with the notable exception of the Chicago Cubs winning their first World Series in more than a century.

TV has faced spiraling costs for sports rights for decades. Upstart Fox bid aggressively for games in the 1990s to help secure its place as one of the major networks. ESPN, easily the most expensive channel in typical cable bundles, at more than $7 a month per subscriber, has used its rising financial might to secure a growing slate of professional games. Sports pundits say it overpays for programming, relative to the major networks, but Disney has said it is happy with its contracts.

For some sports, and some particular games, TV has paid dearly to protect its rights for many years. ESPN and Time Warner’s TNT hold National Basketball Association rights that extend through 2025 under a combined $25 billion, nine-year deal. CBS and Time Warner are together paying $10.8 billion for “March Madness” college basketball games through 2024, plus another $8.8 billion to extend through 2032. Other deals are shorter. CBS, Fox, and NBC have Sunday football games through 2022 under a nine-year deal that costs $27.9 billion combined. Thursday night games are up for bid after the coming season.

Such high prices have led investors to wonder whether TV rights for sports are a bubble waiting to pop. The average cable subscriber now pays more than $20 a month for sports. Not everyone watches sports, of course, which is part of the reason subscribers have been cancelling service. RBC Capital Markets estimates that cable’s subscriber base will decline by 3% this year, which would be about twice the rate of decline seen last year.

TV’S sports problem amounts to this: If last year’s disappointing viewership is the start of a secular decline — because viewers are too busy, or the games or seasons are too long, or the entertainment alternatives are better, or what have you — then TV has bet big, right at the top of the market. On the other hand, if sports fans stay as glued to their games as ever, TV could soon have to compete with a crop of new rights bidders on financial steroids.

Alphabet, which owns YouTube and Google, and Facebook, which owns Instagram, are a mirror image of broadcast TV. Their audiences are vast and growing. Consider: Various Super Bowls dominate the list of the most-watched U.S. telecasts ever. But there are more than 40 YouTube videos that have each been watched 10 times more than any Super Bowl. Advertisers are quickly shifting dollars online. Digital ad spending passed advertising outlays for TV for the first time last year. This year, the gap will widen to $10 billion — with $83 billion for digital, and $73 billion for TV, according to industry forecaster eMarketer. By 2021, the gap could be more than $50 billion. And while TV is in a spending race for content, YouTube and Facebook get free content created by their users.

Meanwhile, Amazon seems to be trying — and failing — to spend money as fast at it makes it. This year, it is likely to generate $10.5 billion in free cash, more than any television network’s parent company. And Amazon’s free cash flow could triple by 2020. By then, Wall Street predicts, the big four TV networks and their parent companies — with their theme parks, movies, and other ventures — will generate a combined $30 billion in free cash flow. Alphabet, Facebook, and Amazon are seen combining for more than $100 billion.

All three dot-coms have a strong and growing interest in video. Amazon offers a subscription video service as a giveaway to customers who pay $10.99 a month, or $99 a year, for its Amazon Prime shopping service with free two-day shipping — but that giveaway service won three Oscars this year. Alphabet says that YouTube viewing time on televisions has nearly doubled over the past year. It has a fledgling subscription service called YouTube Red and a new live TV package called YouTube TV. Last quarter, it unveiled six new original shows with stars such as Ellen DeGeneres and Kevin Hart.

Facebook on its latest earnings call touted video as a growth and investment priority. “Video is the most engaging experience that we can offer,” said finance chief David Wehner. User videos are the core focus for now, but “there’s opportunities for semiprofessional and professional content,” he said.

There is much more to producing sports on TV than simply paying for rights. The Emmys have 41 categories for sports, including play-by-play, studio host, camera work, and audio. Local-market and advertising expertise matters, too. But scripted programming is complicated, and the streamers seem to have gotten the hang of that, judging by their growth rates. All of this means that media investors should take care to favor only companies that look capable of managing a future sports cliff.

Comcast has the strongest hand of the bunch. It owns the only major cable carrier that has added video subscribers of late. The carriers, in general, are well positioned to deal with cord-cutting, because it’s something of a misnomer. Customers do without their video signals, but they become all the more dependant on the cords that bring their broadband internet service. Cable carriers take advantage of this by bumping up the price on broadband for subscribers who cancel their video. As a result, Comcast can prosper for years to come, regardless of who wins the war for viewers. Meanwhile, theme park profits are galloping higher after years of spending on expansions.

CBS is much closer to being a show-business pure play, but it has led in television ratings for years, which helps when the company pitches cable carriers for higher fees. The company also has streaming services of its own in Showtime Anytime and CBS All Access. The valuation is attractive. Whereas Comcast sells for close to 20 times this year’s earnings forecast, CBS goes for less than 15 times. Wall Street predicts 16% earnings-per-share growth next year, but estimates have been gradually coming down.

Disney has heavy sports exposure through ESPN, the company’s biggest earner. But it also owns a flourishing theme-park business and has one of the best win records in the movie business in recent years. All of that is worth a premium price, but the stock already carries one, at 18 times projected earnings for calendar 2017, and earnings growth has recently slowed. Disney has plans for a streaming service for ESPN that will bypass cable, and has a stake in Major League Baseball’s streaming arm, BAMTech.

Fox’s CEO, James Murdoch, has told analysts that the company could offer a direct-to-customer model in the future. For now, Fox, like Comcast, Disney, and Time Warner, has a stake in the streaming service Hulu. By 2020, predicts eMarketer, Hulu will have 35.8 million subscribers, behind Amazon Prime Video, with 96.5 million and Netflix, with 139 million.