LOS ANGELES, Aug 6 — Walt Disney Co has acknowledged that even powerhouse network ESPN and its live sports programming are not insulated from the massive changes shaking up the television landscape, confirming warnings from sceptics.

The entertainment giant’s frank admission raised questions about whether the pace of “cord cutting,” or dropping of pay TV service, will hasten.

“There has been this enormous run with ESPN without any speed bumps of any kind over the last decade,” said Marc Ganis, president of SportsCorp, a sports business consulting firm. “Now there is a disruption in the flight path.”

Disney Chief Executive Bob Iger said on Tuesday that ESPN has seen “modest” declines in subscribers as viewers move to cheaper digital platforms. He would not be more specific but he defended the network’s ability to navigate the shifts.

It did not convince some investors as Disney shares dropped 9.2 per cent to US$110.53 yesterday after the company warned that subscriber losses as well as currency impacts will hit profits.

Some Wall Street analysts are also concerned about ESPN’s rising costs for sports rights as pay TV comes under pressure from new players.

In a note to clients, Nomura Securities International said, “ESPN and cable ecosystem-related fears may become marginally greater concerns in the minds of investors, this despite the power of the ESPN brand and, what we believe to be its ability to benefit from new online and direct-to-consumer monetisation potential.”

Disney executives are realists about the impact of technology and changing viewing habits, particularly among younger audiences, Iger said. But he said he expected the expanded basic cable package with ESPN and hundreds of other channels to “remain the dominant package of choice for some years to come.”

Iger said he does not plan to take any radical steps in the near term to sell ESPN online.

He also stressed that live viewing on ESPN remains strong. On TV, 83 per cent of households tuned in to ESPN at some point during the first quarter of the year. ESPN has rights to major sporting events locked up for years.

Live sports are one of the few types of programming that still draw massive audiences at one time, making them valuable to advertisers. And for many customers, sports is the reason they keep their pay TV subscriptions.

“All this adds up to a very strong hand and gives us enormous confidence in ESPN’s future no matter how technology disrupts the media business,” Iger said.

Some analysts agreed. “Their claim on audiences that advertisers want to get in front of - people that watch big, live sporting events — is very strong,” said Barton Crockett, analyst at FBR Capital Markets.

Iger, speaking on the company’s quarterly conference call, said 80 per cent of ESPN’s customer losses came from a reduction in the number of households that subscribe to pay TV, and only a small per centage from customers taking slimmer channel bundles.

SNL Kagan estimates ESPN will average 94.6 million subscribers this year, down from 98.8 million in 2012.

Iger said Disney’s contracts provide flexibility to sell channels directly to consumers if the marketplace changes. The company is testing new approaches, such as putting ESPN on Dish Network Corp’s US$20-a-month Sling TV package.

Ganis, who believes ESPN is well-positioned to weather the industry’s shifts, applauded the company for looking for ways to adapt. “It’s better to be focused on it now when it’s just a million or so before it becomes a much larger number,” he said. — Reuters