Affiliate fees for Disney
Media companies like The Walt Disney Company (DIS) mainly derive their revenues from affiliate fees and advertising. Affiliate fees are the carriage fees paid per month per subscriber by MVPDs (multichannel video programming distributors) like Comcast (CMCSA) and Dish Network (DISH).
Falling subscribers for Disney’s ESPN could also impact Disney’s affiliate fee revenues in fiscal 1Q17. In fiscal 4Q16, Disney’s Media Networks saw its affiliate fee revenues fall 3% year-over-year. The reason for the decline was a difficult comparison to an extra week of operations in fiscal 4Q15. Adverse currency rate fluctuations also dragged down affiliate fees revenues for Disney’s Media Networks.
However, affiliate fee revenues for Disney’s Broadcasting business were up in double digits in fiscal 4Q16 as a result of higher rates.
Time Warner’s affiliate fees
In contrast, Time Warner (TWX) expects “double-digit growth” in affiliate fees for its Turner business division in fiscal 2017.
The reason Time Warner expects a high rate of growth for its affiliate fees in fiscal 2017 is that it continues to “believe that the strength of the Turner networks and our position within the ad-supported cable market is going to be able to garner fair value, and we’re going to do everything we can to continue to extract fair value for the value that we think that our networks are bringing to both distributors and consumers.”
In fiscal 3Q16, Time Warner recorded 15% year-over-year growth in subscription revenues in the United States for its Turner business division. Subscription revenues comprised 57% of Turner’s total revenues in fiscal 3Q16 at $1.5 billion. The rise in subscription revenues was mainly driven by the growth in affiliate fees. Turner demanded higher rates as its affiliate fee agreements came up for renewal.