"Even the Force cannot protect ESPN," BTIG Research analyst Rich Greenfield recently wrote in a note downgrading the stock to "sell".
The sports channel long "viewed as the crown jewel of the Disney empire ... now appears poised to become Disney's most troubled business as consumer behavior shifts rapidly".
ESPN is Disney's biggest single business and its most profitable cable channel, and the Big Mouse once regarded it as a virtually unstoppable media force. The traditional cable bundle, in which channels are offered only in bulk, made it an especially sweet deal: The largest chunk of the cable bill goes to ESPN - about US$7 a month - whether a subscriber watches it or not.
Even the Force cannot protect ESPN.
To maintain that stronghold, and to ward off rivals like Fox Sports 1 and NBC Sports, ESPN has spent aggressively on massive multi-year contracts for the sports broadcasting rights.
In 2011, ESPN agreed to pay more than US$15 billion for 10 years of rights to air NFL games - nearly four times what Disney would pay for Lucasfilm, owner of the Star Wars and Indiana Jones mega-franchises, a year later.
But the speed at which cord-cutters have slashed their cable bills has shaken the industry.
Seven million US households have dropped ESPN in the last two years, Disney said last month in a federal filing, shrinking the field for the "Worldwide Leader in Sports" to 92 million homes, its lowest subscription base in nearly a decade.
That's a bad sign: About 45 per cent of Disney's operating profit last year came from cable TV, and that income is expected to flatten in the next year due to the shrinking TV business. Meanwhile, ESPN has shown no signs of ending its TV-rights spending spree.
Disney last year signed a deal with the NBA costing US$1.4 billion every year for nine years - three times as expensive as Disney's previous TV deal with the league - even though ESPN's basketball viewership last season fell 10 per cent to 1.5 million viewers, the network's lowest since 2008.
Disney is a massive media empire with some of the strongest film, merchandising and media moneymakers on the planet, and it has a safeguard that many similarly threatened media giants lack: Its vast, world-spanning machine of toys, theme parks, video games, cruise lines and, of course, the corporate "synergies" linking those businesses together.
And, of course, there's the Star Wars franchise, whose seventh film has already posted the world's best-selling opening weekend, biggest first week and single-day records for any film - beating those worldwide records, most impressively, before even premiering in China, the world's second-biggest movie market.
We have lost some subscribers, but we believe we will continue to derive growth from ESPN, just not be at the rate it was before.
Disney has already planned a series of Star Wars blockbusters - including the live-action spin-off, Rogue One: A Star Wars Story, set for premiere next December - for yearly release through at least 2020.
Disney's stock ended Monday up about 1 per cent, and is up 12 per cent from its August low, when investors sold off many media companies that warned their TV businesses were slowing.
But the recent sell-off in Disney's shares shows investors and analysts are beginning to take ESPN's woes seriously.
ESPN recently laid off 300 workers and severed expensive deals with name-brand talent like Keith Olbermann and Bill Simmons.
While many have praised Disney's prescient investment in Lucasfilm - the next year of merchandise for "Force Awakens" is expected to bring in US$5 billion alone - its moves in cable have been far more criticized.
Disney has licensed lots of content to streaming video services like Netflix, a short-term moneymaker that Greenfield said hurt its long-term goals. Cable giants have argued that big improvements to streaming make it easier for viewers to drop live TV, and for advertisers to pay less.
The simple way to keep cord-cutters paying and preserve ESPN could be offering it up on streaming video directly, a move even Disney chief executive Bob Iger has called "an inevitability".
But the "direct-to-consumer" business brings its own hassles: namely, fights with cable companies like Comcast who buy and bundle channels for sale to TV watchers, and who have their own business interests to protect.
To serve the ESPN fan well, to essentially perpetuate a competitive advantage ESPN has, and to continue to support the strength of its brand. ... We haven't second-guessed that at all.
The bundle has also offered Disney such a lucrative cash stream that cheaper online streaming services have not come close to matching. If a third of ESPN's subscribers, or about 30 million households, shifted to paying for the channel online, the sports network would need to charge three times as much, or about US$21 a month, to make its money back.
Iger, the Disney chief, has sought to calm investors worried about ESPN's fortunes, saying rising cable-subscription fees and increased advertiser spending would help the sports giant stay on top. Speaking on Bloomberg TV last week, Iger said, "We have lost some subscribers, but we believe we will continue to derive growth from ESPN. It will just not be at the rate it was before."
As for the expensive rights deals, Iger said they have served their purpose: "To serve the ESPN fan well, to essentially perpetuate a competitive advantage ESPN has, and to continue to support the strength of its brand. ... We haven't second-guessed that at all."
