1 Iconic Stock Down 55% to Buy Now
Shares of Walt Disney (NYSE: DIS) have plunged about 55% since peaking in early 2021. Back then, Disney's parks and films businesses were still reeling from the pandemic while the streaming business was gaining subscribers at an unearthly pace. Today, the situation has flipped, and that has investors worried.
Disney still relies on linear television to generate a significant amount of its operating profit. That's a problem because linear TV is probably doomed. On-demand and streaming platforms are winning out, and the days of cable companies paying lucrative fees to channels are fading as consumers cut the cord. For Disney, which owns ABC, ESPN, and a handful of other channels, this means that the linear TV business is going to be under increasing pressure as time goes on.
In the quarter that ended on April 1, Disney's linear network segment saw revenue slump 7% and operating income tumble 35%, both on a year-over-year basis. ESPN in particular is becoming a thorn in Disney's side. In the good old days of cable, ESPN brought in enough fees to more than justify the expensive deals to air sporting events. But as cable subscribers dwindle, the revenue ESPN contributes dwindles as well. Sports deals aren't getting cheaper, leaving ESPN in quite a pickle.
Source Fool.com
