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July 21, 2006 at 10:36 AM

ESPN/Disney Mobile, fold now!

That’s what Merrill Lynch says.

In a note to investors, the brokerage called for ESPN to “throw in the towel” on its branded mobile phone service, according to a story in Mediaweek. In a separate news item, Merrill Lynch analysts were quoted as also questioning Disney Mobile.

The two reports question the idea of the MVNO, short for mobile virtual network operator, in which a company buys minutes from an existing cellphone network and rebrands them to target a market segment.

The Mediaweek story said analysts Jessica Reif Cohen and Michael Kopelman wrote that “it is time for Disney to pull the plug on Mobile ESPN,” because it has had little luck in landing paying subscribers since Disney launched the service during Super Bowl XL.

The analysts estimated that ESPN Mobile, which resells minutes on the Sprint network, will gain only 30,000 subscribers this year, well below the original estimate of 240,000.

In the case of Disney Mobile, paidcontent.org quotes analysts as saying: “We are increasingly skeptical of the prospects for this service [Disney] as well…. More importantly, we believe that most parents who purchase cell phone service for their children [Disney’s target market] are likely to do so by adding a line to their existing plan [i.e., staying with their provider, but moving to a family plan].

Disney’s model hoped for the opposite — that parents will buy their child a Disney phone, and then they will migrate over. Perhaps, but seemingly less likely.

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