Disney Posts Mixed Earnings $1.58/share on Rev of $14.24B

[Laketravis]

That's true but what separates the good from the great is the willingness to tell the truth

Which I believe brings us full circle. She was telling the truth.

 

[ford91exploder]

Well if it went to $0, it will have crashed. No need to really say both.

point taken, what i was trying to say but badly is i don't think it will happen slowly when if it does happen

 

[ford91exploder]

Which I believe brings us full circle. She was telling the truth.

Yup - she was indeed. But as the tsunami of discounts have shown that strategy is out of gas

 

[PuertoRekinSam]

This feels just so familiar... just swap out some of the nouns “streaming service” with “internet portal” and “Netflix” with “yahoo”, “Disney streaming” with “go.com” and it’s Same thing that happened in the late 90s. Entering the game a bit too late, lots of competing established players, and it’s going to fall.

Hopefully Disney is the “google” of this situation and comes out on top; But unless other smaller producers can pay to be provided, on disney’s Service (allowing for diversity) I am not sure they will be.

 

[ford91exploder]

Thoughts:

Adding a streaming ESPN is the correct decision. But if one defines 'fix' as 'maintain current margins & revenue', then a fix for this isn't coming. It's a needed adjustment for a new normal. A normal that will not allow the previous margins to continue. And that is with them hoping that Amazon implodes before they become much more aggressive in wanting to stream sports content of their own. How can they deliver any margin if Amazon comes fully into the space with their 'no margin' business model.

And they want to do a Disney streaming channel with original content specific to the streaming channel. Count me skeptical. Is the audience rejecting Disney Channel because of the medium, or because of the content?...

Right now on CNBC they have Todd Juengler, who has been labeled the #1 media analyst. He rates $DIS as 'aggresively neutral' w/ a $107 price target. Said he doesn't know why you need to own it (or any other media stock) now...

(Rich Greenfield is on Fast Money tonight at 5 Eastern US. too bad I'll be in bed for that one).

Another thing that jumped out to me was the big drop in films. 16%. Yes it's because of 3, not 4 super headliner films in the same period. But that highlights that $DIS is becoming more and more cyclical.

More cyclical means some investors will exit their positions because a $DIS holding adds risk to their portfolio. And yes, some like cyclicals, but they will most likely wait for what they believe to be a bottom before picking it up.

(Another thing I've noticed recently. In the past on Seeking Alpha there used to be so much pixie dust that it would make someone on a Disney Mom panel blush. Not anymore).

But as far as the parkgoer is concerned, there is much to be concerned about.

The CFO's comment about looking to further expand margins at P&R is not good news.

Margin isn't between what it costs them to do business and the revenue they receive. Margin is also between what you pay and what you get for your entertainment & vacation dollar.

And we know what they do to expand margin - price increases, upcharges, and cuts. And the first cut has already been announced. The closing of the Great Movie Ride is most definitely a cut. Yes new stuff is coming. Wall Street wants new stuff to monetize IP and bring in more revenue. If they did nothing, prices would go up, because that's what they do. All this new stuff (even if some of it is 'value engineered' down later) is expected to be Paid For by the Customers, and then some..... and some more..... and some more....

The question in the future is how much will a trip to the swamps cost. And what will you get for your money. How much of a 'Disney Experience' will a guest get out of the Basic Ticket, and how much will it cost to get the experience many of us are used to? And what happens when the next recession comes?

When the next recession comes it aint gonna be pretty in the swamps or for TWDC in general.

 

[HauntedPirate]

It depends. If ESPN 3 is included then you've got a pretty good college draw there from September to March built in. They seem to be making a pretty big push into soccer. I would guess depending on how many broadcasting rights they can secure that could bolster the summer months (is that when soccer plays?).

Sports are generally personal, so it's going to vary from person to person, but I would wager it is going to depend on their sports offerings, not their talking head slate.

Great point about sports being personal. For me, if ESPN continues their move towards more soccer and NBA coverage, they'll lose me forever as those are the two sports I utterly despise. Never been a soccer fan (and I cannot stand the yuppie "soccer is kewl!" nonsense) and I lost interest in the NBA after the 1998-99 season, when fundamentals became passé and highlights were all that mattered. If you could choose two sports that would turn me off of a product or offering, those are it.

 

[Laketravis]

In the most scientific study I am currently capable of conducting, I just asked my almost 12 year old if he'd pay to watch Disney shows on a separate "channel" if that were the only place he could get them. He first pointed out that he hardly watches Disney anymore, pretty much just Gravity Falls on XD. So I asked him if the only place he could watch Gravity Falls would be on a Disney channel that he would have to pay for, he replied "Well, that's just stupid. Why would they do that?"

 

[HauntedPirate]

This feels just so familiar... just swap out some of the nouns “streaming service” with “internet portal” and “Netflix” with “yahoo”, “Disney streaming” with “go.com” and it’s Same thing that happened in the late 90s. Entering the game a bit too late, lots of competing established players, and it’s going to fall.

Hopefully Disney is the “google” of this situation and comes out on top; But unless other smaller producers can pay to be provided, on disney’s Service (allowing for diversity) I am not sure they will be.

But at least Disney produces something tangible, unlike the Alphabet company. I liked them until I realized their entire business model is based on using your browsing habits to target advertising on your screen. "Privacy" was, and to a great degree still is, a four-letter word to them.

 

[HauntedPirate]

I can't shake the feeling that these streaming services are 5 years too late, or 6-7 years too late once they finally roll it all out.

 

[Amidala]

Whether or not this streaming service has Marvel and Star Wars (which I know even Disney itself isn't sure of yet) will go a long way in deciding if this service succeeds or fails TBH. On the one hand...if this streaming service has a wider variety of Disney/Pixar movies than Netflix currently does (which I'm sure it will) then that alone may make it desirable. Usually Netflix would only have a handful of Disney films at a time, so if you were in the mood for a specific Disney movie...you were just out of luck. If this streaming service offers most (or all) of Disney's animated filmography...that's a big deal IMO, especially when Disney is still leaning on the irritating "vault" DVD release system.

Add the Star Wars and MCU movies to the mix, and you have yourself a pretty solid starting point for a streaming service. But it seems like that would also make for a lot of confusing overlap...Does Disney also own the Clone Wars series, and would that also be pulled from Netflix and added to their new streaming service? And obviously Disney owns the MCU properties, but the Netflix MCU properties are Netflix originals...no matter how many MCU films they pull from Netflix, Jessica Jones, Daredevil and others will remain at Netflix.

 

[Laketravis]

I thought this was an interesting perspective:

Why Netflix Doesn't Need Disney

 

[aprincessatlasst]

I thought this was an interesting perspective:

Why Netflix Doesn't Need Disney

Yes interesting read. When I heard the announcement I did not think it would affect Netflix in the long run however I did think what is Disney thinking? Netflix has not had a contract with DIS for very long anyways. We have had Netflix for about 7 years and only recently noticed all the Disney movies. A little late to the game on Disney's part and quite a bit of a gamble. Things like Tidal and NFL subscriptions run through my head. Disney is big no doubt about it however they don't always get everything right. Time will tell what kind of content it will have however relying on old Disney classics for Nostalgia will not work imho.

 

[ford91exploder]

I can't shake the feeling that these streaming services are 5 years too late, or 6-7 years too late once they finally roll it all out.

They are too late to the game

 

[AndyS2992]

I don't know if this has been mentioned already but here in the UK we already have a dedicated Disney streaming service called Disney Life which launched in 2015. It has most classic movies live and animated, Pixar, Disney channel, Disney Junior and what not shows, Marvel and Lucasfilms content as well as random classics and shorts, soundtracks and story books. Oh and ABC and Touchstone movies too. And it's only £4.99 a month ($6.49).

https://disneylife.com/

It's advertised non stop on TV and in magazines and in Disney home media cases. I don't know how successful it is though.

 

[UpAllNight]

I don't know if this has been mentioned already but here in the UK we already have a dedicated Disney streaming service called Disney Life which launched in 2015. It has most classic movies live and animated, Pixar, Disney channel, Disney Junior and what not shows, Marvel and Lucasfilms content as well as random classics and shorts, soundtracks and story books. And it's opnly £4.99 a month ($6.49).

https://disneylife.com/

It's advertised non stop on TV and in magazines and Disney home media cases. I don't know how successful it is though.

When I last looked it didn't have Marvel or Lucas, which is what put me off. But it seemed like a good service otherwise.

 

[AndyS2992]

When I last looked it didn't have Marvel or Lucas, which is what put me off. But it seemed like a good service otherwise.

It doesn't have the actual Star Wars or Marvel movies from what I can see but it does have the Disney XD channel animated shows like Star Wars Rebels and Ultimate Spider Man, Hulk, Agents of S.M.A.S.H and so on.

 

[UpAllNight]

It doesn't have the actual Star Wars or Marvel movies from what I can see but it does have the Disney XD channel animated shows like Star Wars Rebels and Ultimate Spider Man, Hulk, Agents of S.M.A.S.H and so on.

I'd be more likely to pay £7-8 for the service incl Disney and Marvel than £5 without it. But as I say, it's a great deal if you watch a lot of classic Disney films. Or if you have kids and want to do what my parents did and shove me in front of the TV to watch Lion King 5 times a day

 

[HauntedPirate]

For my money, I think Disney would need to offer up a selection of movies like they do on-board the DCL ships, and add in a lot of other TV shows to make this worthwhile. And adding Star Wars movies and shows would be wise as well (Don't recall if those were available on the ships or not).

 

[5thGenTexan]

I understand streaming is the future, but I hope its not the only option in the future. I still watch TV the old way. I sit down and scroll through the guide for something I want to watch right then. I don't subscribe to any streaming service. All seems too complicated just to watch TV.

 

[GoofGoof]

Right now even while Tourism is up in MCO Disney is forced to offer huge incentives to visit.

I'm confused.

1. You claim WDW has been offering huge discounts to get people to visit
2. P&R revenues are up
3. P&R segment income is up
4. Operating expenses are up
5. Attendance was up but not a major driver

So how exactly was attendance only up slightly, revenue per person should be down due to these deep discounts but somehow both revenue and profits are up sharply. Well maybe at least profit are up due to these famous cost cuts we are always hearing about...no wait...operating expense is also up. Hmmm seems like something doesn't add up here.