Star Wars “The Force Awakens” Mania Doesn’t Wow Wall Street

The Force Awakens broke records, but that wasn’t enough to ease Wall Street’s concerns about Disney’s cable business.

By John Paul Titlow

December 22, 2015

Star Wars, Star Wars, Star Wars. We can hardly go anywhere—especially Facebook or Twitter—without hearing about The Force Awakens, which appears to have totally consumed our popular culture since it opened last week. Indeed, the sci-fi blockbuster has already raked in over half a billion dollars worldwide and shattered box office records.

So why has Disney’s stock been slipping the last few days?

In a word: Cord-cutting. Sure, Disney is celebrating the highest-grossing U.S. box office opening of all time, but the media conglomerate is also in the cable business (among other things) and that leaves investors with plenty to keep them up at night.

(December 22, 2015) marked the third day of decline for the Walt Disney Company’s stock, thanks in part to “cord cutting pressures on Disney’s ESPN,” according to the Wall Street Journal.

Disney has its hands in a number of different businesses, but by far the biggest chunk of its revenue comes from its TV operations. That includes ESPN, ABC, A&E, and the various Disney-branded channels. And as more people cut the cord from traditional cable and the media industry’s growth slows, that means that Disney’s most lucrative businesses face pressures that aren’t easily overcome by enthusiastic hordes of sci-fi nerds.

For years, cable providers and networks were able to withstand the threat presented by the cord-cutting phenomenon in part by sticking to their age-old model of offering bundled cable subscriptions. In recent years, as online viewing has become more mainstream and non-cable competitors like Netflix have scored major hits, those bundles have begun to unravel. Media giants like Disney, Time Warner, and Comcast, meanwhile, are left scrambling to figure out how to plug the revenue leaks caused by this “great unbundling” of the cable TV business.

Investors and analysts fully expect Star Wars to keep amassing piles of money—but to keep investors happy, Disney is going to need the force to awaken some new revenue streams.