Disney COO Says Wall Street Overreacted To News About ESPN Sub Loss

The subject was on the top of people’s minds today when Disney COO Tom Staggs appeared at the Bank of America Merrill Lynch Media, Communications & Entertainment Conference. Disney’s share price is down 15.4% since August 4 when the company trimmed some financial forecasts, noting that ESPN had lost some subscribers — a disclosure that took down most other media company shares too.

Did investors overreact? “The short answer is, yes,” Staggs says — adding that there’s “obviously a lot going on in the market” beyond the ESPN news.

The larger concern is that pay TV networks are vulnerable to cord cutting — especially as digital platforms including Netflix grow. “As the market evolves we’re going to continue to see new entrants,” the COO says. Even so, “we feel very good about where we sit. ESPN In particular is one of the most important and valuable brands in programming.”

Disney also is confident that the pricey pay TV bundle “is going to continue.” But it “should continue to evolve,” for example with cable and satellite operators improving the user interface, navigation, search, and access to programming.

Meanwhile Disney has taken advantage of the drop in its stock price by repurchasing its stock: The company bought $2.4 billion worth since August 4, bringing the level for the fiscal year that ends this month to $5.6 billion.

Related: Now is the time to buy Disney Stocks

On other fronts:

Star Wars: The response to the franchise so far, including in viewing of the trailers for December’s Star Wars: The Force Awakens, has been “very broadbased,” the COO says. “We’re confident we’re building a franchise that will appeal to folks who love Star Wars and to Star Wars entrants as well.” But he declined to “speculate about how big it will or won’t be.”

China is a new market for the franchise, making it “a bit of a wild card.” Still, Staggs says “it’s something that China will embrace.”

The COO says his goal is to take “a well known and successful franchise and [make] it more valuable.” To that end, he crowed that last week’s “unprecedented” Force Friday roll out of Star Wars-related merchandise was a success — with 130,000 people around the globe “lined up at midnight to get product.”

Theme Parks: Construction will begin next year on the recently announced Star Wars-themed lands for Anaheim’s Disneyland and Orlando’s Disney’s Hollywood Studios.

And, as you can imagine, Staggs is still enthusiastic about opportunities in China — despite recent signs of economic weakness there. “We remain optimistic and confident about Hong Kong” Disneyland, he says adding that “we will see continued growth in Hong Kong over time.” And things are still on track for Shanghai Disney Resort, scheduled to open this Spring.

TV advertising: Although a lot of networks say the market’s been weak, “we were pleased with the upfront” sales season, especially at ABC. “We came away with industry leading price increases. But volume was down a little bit.” ESPN fared better with increases in volume and prices.

Consumer products: It’s not just a Star Wars story. “It is broad based” including with Marvel characters, upcoming Pixar films, and “continued strength with Frozen.” That will “continue to be an important piece.”

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