Disney's FY20 Q3 Earnings (8/4/20)

[TrainsOfDisney]

I highly doubt I would watch Mulan if it wasn’t an upcharge (I’ve yet to watch any of the live action remakes) but I think it was a mistake to create the pay per view model and connect it to the Disney+ brand. To me that confuses what Disney+ is in the mind of the consumer.

 

[Sirwalterraleigh]

I really need some education here. According to Marketwatch, "Walt Disney Co. reported a quarterly loss of nearly $5 billion Tuesday". "The loss was largely due to a $4.95 billion charge Disney took" "After adjusting for that charge and other factors, Disney reported net income of 8 cents a share, compared with $1.34 a share a year ago."

So Disney actually lost money for the quarter??? Sounds like accounting tricks making it seem better.

Then, you get the following statement: "Disney’s earnings were helped by an accounting maneuver in the TV business that boosted operating income beyond expectations. Disney said that it moved costs related to its ownership of rights to sports programming to future quarters because U.S. professional sports were not played in the quarter. That boosted operating income in the media-networks segment to more than $3 billion, 48% higher than last year and nearly double analysts’ average expectation."

So even more accounting scams???? I guess this is why they pay CFOs tons of money.

You know...every time I get shouted down for describing “shell accounting” I laugh.

It’s usually “Disney can’t lie!!!”

They can’t Enron...but they are legally allowed to move and twist the numbers into a Bavarian pretzel to their advantage. That’s the point.

Stocks are no longer about building and selling products (what they were 100% designed to measure)...its all “prediction”’and “confidence”
...which translates to crap.

Why wouldn’t Disney use all the gimmicks? They are penalized for telling the truth in the short and medium term - which is all anyone cares about.

The truth is their products are most not wanted at all right now. And that’s a real thing. The piper can only be given the wrong address for so long.

Hi Bob, question regarding the Parks, Experiences and Products division. The exterior plaster of Disney's Animal Kingdom Villas - Kidani Village is cracking, visibly outside of the lobby. It is so severe that mesh wiring is visible. What is the timeline for this repair?

“...buy a 100 point/$19,500 add on at the Bon Bini towers and we’ll talk..”
- Bob

I don’t get those that aren’t following what is still an almost apocalyptically dire future for the parks. The entire resort is designed and based around cramming as many people in as closely as possible and extracting as much money as they will bleed.

Social distancing isn’t going away, even if masks manage to as some point. Nor is enhanced cleaning going anywhere. It is going to be many years before 20M people walk through the gates of the MK again.

I will never get it...

Most get the truth...some pollyannas jump on the thread and drop things like “it’s great here! Went yesterday...only 75 minute wait for slinky. Best time ever”!!

...as if that’s gonna keep the park open in six months when they are hemorrhaging money all over the battlefield.

 

[Ojo4]

I feel like that happened on the previous call too. There were lots of "insider predictions" that never came to fruition.

It's also interesting how often the unrealized predictions are negative. It's almost like people are using these avenues to voice their personal displeasure rather than provide actual insight into the happenings of the company.

Insiders are wonderful at telling you what new attractions are coming or whether the new Mickey shirt is coming in blue or red. They're absolutely clueless when it comes to understanding the broader operations of one of the largest multinational companies on the planet and the subsequent leadership gossip that amounts to nothing. You don't get to be wrong about the company being on the verge of bankruptcy when they show up with tens of billions in cash and blow everyone's expectations out of the water

 

[Sirwalterraleigh]

So, if I ignore student loan payments, mortgage payments, and the loan payments for my cars, then I have positive cash flow????? And should consider myself wealthy???

Welcome to Wall Street, baby...

You want to grab a Korean fusion taco from that new food truck across from the Bull Statue for lunch?

 

[MisterPenguin]

So, if I ignore student loan payments, mortgage payments, and the loan payments for my cars, then I have positive cash flow????? And should consider myself wealthy???

Let's say you saved your money and bought a car for $30,000.

Seven years later, when you go to sell it, you can only get $5,000.

Do you go around telling people you lost $25,000?

If you're a business, you do. You take depreciation into account and you post the full extent of loss of value. If your business isn't making enough of a profit to cover that depreciation, then, yes, the value of your business is reduced. And it can be troubling to know you're not creating enough profit to replace depreciated infrastructure.

But... operations-wise, you still made a profit. It's not good news that it wasn't enough to cover depreciation, but, it's good news that in the middle of a raging pandemic that your operations didn't lose money.

Disney was walking into this quarter with the possibility that operations were going to be a net loss. People were throwing around numbers like losing $1 Billion a week in loss of operations. So, it is very good news that the operations was a net profit.

At this rate, Disney can continue for years without being forced to divest itself of any business segments.

IOW, Disney will most definitely, without a doubt, survive the pandemic. People claiming it's going to collapse are dead wrong.

 

[ParentsOf4]

Do I understand this correctly: the parks are making a profit, operating as they are with the crowds (or lack of) they are drawing?

The Parks, Experiences and Products segment were a bloodbath, losing $1.96 Billion for the quarter.

It's corporate Disney as a whole that squeaked a small profit on its operations.

 

[Creathir]

2019 US average ticket price was $9.11. Times four that is $36.44. One month of D+ if you’re only subscribing for the month is $7 USD. This costs the same as a matinee and Disney keeps around 95-97% of the take. Even better deal if you have a 4K HDR TV at home since D+ streams in that format and TWDS started moving their new releases to that format.

We don’t know the conditions of the transaction, but that’s a steal.

There is not an equivalency of a theater experience to the home.

I can buy Christmas Vacation in the bargain bin at Walmart for $4.99, yet I’ll gladly pay $9/ticket to watch it at Alamo Drafthouse for a single viewing.

 

[WDW Guru]

2019 US average ticket price was $9.11. Times four that is $36.44. One month of D+ if you’re only subscribing for the month is $7 USD. This costs the same as a matinee and Disney keeps around 95-97% of the take. Even better deal if you have a 4K HDR TV at home since D+ streams in that format and TWDS started moving their new releases to that format.

We don’t know the conditions of the transaction, but that’s a steal.

I want to know where you get a ticket that cheap. Around me you cant get a ticket cheaper than $16. Makes a PVOD for $30 seem quite cheap for a family in this area.

 

[hopemax]

I feel like that happened on the previous call too. There were lots of "insider predictions" that never came to fruition.

It's also interesting how often the unrealized predictions are negative. It's almost like people are using these avenues to voice their personal displeasure rather than actual insight into the happenings of the company.

FWIW, I've thought Disney would weather the *crisis* better than most. I just expect them to lag during the *recovery*. I just don't see Disney as being adaptive enough to capitalize on the great global reset. Chapek talks about their great content, but it's all existing stuff, repackaged. That can be comforting during the crisis. I just think when we're finally freed, people are going to be all, "I've been stuck with the same stuff for the last 2 years, give me something NEW!" And others will be better positioned to deliver.

That could be my personal displeasure talking too. Honestly, I'm sick of my TV screen already. Yeah, we're watching a lot of new stuff we have been meaning to try out, and there's some good stuff. But after another 9 months of this until Spring...whatever comes out on streaming better be 10x Baby Yoda. I want to go to a movie, just to go to a movie. Plus, Alamo Drafthouse's popcorn is really good.

 

[ParentsOf4]

Let's say you saved your money and bought a car for $30,000.

Seven years later, when you go to sell it, you can only get $5,000.

Do you go around telling people you lost $25,000?

If you're a business, you do. You take depreciation into account and you post the full extent of loss of value. If your business isn't making enough of a profit to cover that depreciation, then, yes, the value of your business is reduced. And it can be troubling to know you're not creating enough profit to replace depreciated infrastructure.

Disney is not claiming depreciation of its International Channels business. It's claiming an impairment. Disney is stating that a portion of its International Channels business, which it previously assessed at a value of $5B, is now worthless.

As you correctly describe, depreciation is what happens to your car. Each year, your car is worth less than what it was worth the year before. But, it's still an asset. You still are getting (hopefully) good use out of your car even as its value decreases.

In this case, Disney said that most of its International Channels business is a bunch of worthless junk. They are getting no benefit from it and are tossing it in the garbage.

 

[brianstl]

Post the quote from the call.

This is almost entirely virus related. Sure, there are always small issues, but Disney would have reported their usual solid quarter, with dominating parks results absent this virus.

I listened to the call and heard nothing major from Chapek.

I don’t remember that exact quote, but he made a statement that it is going to take a return in consumer confidence in addition to getting past COVID for the parks & resorts to get back to their former performance. That is a statement that while this all may have started with COVID the problems facing the parks & resorts are now deeper than just the virus itself.

 

[MaximumEd]

In this new VOD world, I guess all the money spent on Klipsch and JBL Pro gear, multiple massive 18” subs, projector, processor, amps, and acoustic treatment weren’t such a waste after all like my wife said they were. Who’s stupid now, honey?!?! But Mulan is probably still gonna suck.

 

[DVCakaCarlF]

Shell accounting...taking a $10 bil loan from BOA and calling it “cash on hand”

...I never doubted them.

That’s stock wonky stuff that doesn’t matter though...the important part is just how much of their tangible business they lost and where that goes from here.

Yes, but it’s a matching liability on the balance sheet.

 

[DVCakaCarlF]

I don’t remember that exact quote, but he made a statement that it is going to take a return in consumer confidence in addition to getting past COVID for the parks & resorts to get back to their former performance. That is a statement that while this all may have started with COVID the problems facing the parks & resorts are now deeper than just the virus itself.

And the broader economy.

 

[DVCakaCarlF]

That’s not good.

The future of the movie theater experience is gone.0

 

[Sirwalterraleigh]

Yes, but it’s a matching liability on the balance sheet.

They’re not “lying”...for sure...but setting up angles/twists.

That’s why watching the markets has become boring? Nothing really affects anything anymore.

 

[Sirwalterraleigh]

I don’t remember that exact quote, but he made a statement that it is going to take a return in consumer confidence in addition to getting past COVID for the parks & resorts to get back to their former performance. That is a statement that while this all may have started with COVID the problems facing the parks & resorts are now deeper than just the virus itself.

That’s true...but it also completely ignores that they set themselves up for a longer/bigger disruption. We’ll be discussing this for along time.

 

[brianstl]

It is amazing the amount of people that actually think Disney eked out a profit. Disney isn’t even trying to pass that off as a story. The way accounting rules work meant the my posted paper revenue this quarter, just as in previous quarters they had to post paper costs. Neither are real money.

They lost $4.8 billion on continuing operations. That is the financial performance for the quarter. They lost a massive amount of money.

 

[Sirwalterraleigh]

The future of the movie theater experience is gone.0

And Disney knows this. Theaters are already closed...it’s just not noticeable yet.

There is an angle for Disney...as cutting out the theaters and distribution cuts could potentially make more money off less tickets...less ads too...

But that could also mean big budgets are gone too...which is a reduction of quality.

 

[Sirwalterraleigh]

It is amazing the amount of people that actually think Disney eked out a profit. Disney isn’t even trying to pass that off as a story. The way accounting rules work meant the posted paper revenue this quarter, just as in previous quarters they had to post paper costs. Neither are real money.

They lost $4.8 billion on continuing operations. That is there financial performance for the quarter. They lost a massive amount of money.

That was dead on with a prediction i saw.