Saying Disney management "made a fundamental mistake by overpaying for sports rights" at ESPN, BTIG analyst Rich Greenfield downgraded Disney to "sell" with a $90 price target. The analyst predicted that Disney’s cable network operating income will drop year-over-year. “Not only did Disney overpay for individual sports rights packages, they also acquired too many sports rights in an effort to prevent new competitors such as Fox Sports 1 and NBC Sports from growing stronger,” Greenfield wrote in a report that was released Friday morning.
Greenfield also hit at Disney’s strategy of making its programming available to platforms like Netflix, saying that it “damaged their and the cable network industry’s long-term prospects.” Greenfield: “Over the past 20 years, ESPN has been viewed as the crown jewel of the Disney empire, especially as it was not even the driver behind the company’s acquisition of CapCities/ABC in 1995. Conversely, ESPN now appears poised to become Disney’s most troubled business as consumer behavior shifts rapidly."
