Disney stock drops after downgrade


DisneyDisney stock took a hit on 6/20, dropping the most since 11/12 after Goldman Sachs & Co. downgraded it. While a lot of stocks didn’t fare well on 6/21, Disney slid 3.7% to $61.98 at the close. It actually fell the most among the 30 companies in the Dow Jones Industrial Average. The shares had gained 24% this year, noted a Bloomberg story.

Disney’s ESPN faces rising costs for sports broadcast rights and new competition from News Corp.’s Fox Sports 1, which begins airing in August, Drew Borst, an analyst at Goldman Sachs, wrote in a report. He lowered Disney’s rating to neutral and removed the company from the firm’s “conviction buy” list. ESPN, which provides about 45% of Disney’s operating income, will be less profitable next year due to the higher cost of airing NFL football, Major League Baseball and college sports, Borst wrote. Fox Sports 1 will drive up prices by competing for TV rights. ESPN’s NBA basketball contract expires after the 2015-2016 season and its Nascar rights expire next year, he wrote.

See the Bloomberg story here.