The Week Ahead: Disney's results could forecast a chill for TV industry

May 3, 2014 

In "Frozen," sisters Elsa and Anna are best friends until the secret power of one of them forces her to hide away from the world. It takes a cataclysmic event to bring them back together again in the Disney movie. The television business hasn't frozen over -- far from it -- but it's no secret why it has been getting chillier.

Consider the case of The Walt Disney Co. Operations at the House of the Mouse range from its namesake theme parks and cruise ships to media brands like ABC and ESPN. While most of Disney's business has been booming, its broadcasting unit saw income drop 32 percent in the first quarter from a year earlier. Disney's latest results will be released Tuesday afternoon.

Few are concerned about the dent in Disney's broadcasting business. After all, it's the smallest contributor to the company's bottom line. But its broadcasting and cable TV businesses may carry a warning for the disruption continuing in the traditional television business. With fewer cable compa

nies carrying more channels, the fee Disney gets paid for its channels is under pressure while the cost of programming for those channels continues to rise.

At the same time, viewers are clipping their cable and relying solely on Internet video services. The result can be lower TV ratings leading to lower ad rates. Disney, like most entrenched media companies, is hedging its old school over-the-air broadcast and wire-to-the-home cable channels with digital delivery platforms. For Disney, that's Hulu.

The television business is not experiencing a sudden catastrophe. But for long-term investors, the hope has to be for a gradual warming of the business. Even the princesses of Arendelle in "Frozen" eventually thawed their relationship.

Tom Hudson, financial journalist, hosts "The Sunshine Economy" on WLRN-FM in Miami, where he is vice president of news. He is the former co-anchor and managing editor of "Nightly Business Report" on public television. Follow him on Twitter HudsonsView.

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