High Cost of Doing Business
Because live sporting events drive viewership and, consequently, ad revenues, Disney invests a lot of money in purchasing the broadcasting rights for several sports. Its television contract with the National Basketball Association (NBA) was recently extended by 9 years and $24 billion. While movie theaters struggle to maintain attendance growth, Disney too finds itself operating in an increasingly tumultuous environment. Volatility at the box office can sometimes result in major write-offs from companywide results. The company incurred a $200 million dollar loss for the ill-fated, poorly marketed John Carter in 2012. One major flop can swing profitability in the wrong direction