News Dismal Q3 Earnings

[seascape]

The problem here is that too many people in this thread are misunderstanding what the failure here is.

I agree but there are also lots of people here who want Disney to fail. The only failure so far in the merger is the Fox Studio. They messed up big time. There domestic box office is down 66.5% or $567.5 million. As international business is much higher than domestic, adding $1 billion is reasonable. That is where the revenue loss is. Parks and Resorts even with the decline in attendance had an increase of 4% in profits on a 7% increase in revenue. They also had opening expenses associated with GE and the Gondola transportation system at WDW. It will take until the March 2020 quarter to see the actual results of GE as RotR does not open in Disneyland until January.

I currently subscribe to Hulu+Live TV. I wonder if there is going to be a bundle that includes the $12.99 stuff and Live TV.

I would expect the entire package would cost 51.99. Right now Hulu with ads is 5.99 so they add $7.00 to that for Disney Plus and ESPN plus. Hulu with live TV is 44.99 do adding 7.00 to it equals 51.99

 

[ToTBellHop]

Of course it should. They made a series of blunders that led to underwhelming performance at DL. We'll see if that carries over the DHS, which has a different set of circumstances and problems.

What I object to is the narrative that the land is a failure because they botched the launch. And I do think the impact once RotR opens will be significant. We will see.

Usually you're a lot more rational on these types of things - why the sudden shift?

Because I know how actual conversations within the company regarding SWL are going.

 

[monothingie]

The problem here is that too many people in this thread are misunderstanding what the failure here is.

ESPN gets up and says “I got this”

 

[monothingie]

Parks and Resorts even with the decline in attendance had an increase of 4% in profits on a 7% increase in revenue.

Correct me if I’m wrong but P&R is figured with consumer products as well since they are a single division. As I read the report consumer products offset the loss from domestic P&R.

 

[mikejs78]

Because I know how actual conversations within the company regarding SWL are going.

I'll obviously defer to you there. I just hope Disney learns the right lessons here... The surprising thing is that if they are that concerned, why they didn't retool a little for DHS...

 

[Hcalvert]

I agree but there are also lots of people here who want Disney to fail. The only failure so far in the merger is the Fox Studio. They messed up big time. There domestic box office is down 66.5% or $567.5 million. As international business is much higher than domestic, adding $1 billion is reasonable. That is where the revenue loss is. Parks and Resorts even with the decline in attendance had an increase of 4% in profits on a 7% increase in revenue. They also had opening expenses associated with GE and the Gondola transportation system at WDW. It will take until the March 2020 quarter to see the actual results of GE as RotR does not open in Disneyland until January.


I would expect the entire package would cost 51.99. Right now Hulu with ads is 5.99 so they add $7.00 to that for Disney Plus and ESPN plus. Hulu with live TV is 44.99 do adding 7.00 to it equals 51.99

I was telling my husband the same thing. I was hoping for at least a bundled saving under $7 more a month. With tax, I pay $48 now. Maybe, they'll just add Disney+ and ESPN+ as add-ons. Who knows. They just raised the monthly subscription cost by $5 about 6 months ago.

 

[starri42]

They artificially increased spending per guest this quarter by selling $200 lightsabers and $50 alcoholic beverages to the superfans that showed up.

That's basically the opposite of an artificial increase.

An artificial increase would be cutting prices 20% across the board to clear out merchandise that isn't selling.

 

[HauntedPirate]

That's basically the opposite of an artificial increase.

An artificial increase would be cutting prices 20% across the board to clear out merchandise that isn't selling.

I think his point is that those things aren’t going to be huge sellers once the AP crowds are allowed back into DL. They are aimed at a specific demographic, one that a lot of AP holders likely aren’t a part of. We shall see.

 

[starri42]

I think his point is that those things aren’t going to be huge sellers once the AP crowds are allowed back into DL. They are aimed at a specific demographic, one that a lot of AP holders likely aren’t a part of. We shall see.

I suppose, but if their uptick in single-day admissions holds, those people are likely to continue to purchase lightsabers and droids. And everybody's gotta eat, even if they won't be washing down their ronto wrap with blue milk.

To make his math work, you have to assume that once passholder crowds start to increase, the single day tickets would have to decrease. And there's really no way to accurately predict that. I don't know how typical I am, but if I lived on the West Coast, Sun Belt, Mountain West, or Hawaii and needed a Disney fix, this would make me more inclined to head to Disneyland over Disney World. It's a much more efficient long weekend from Vegas, Seattle, or Phoenix. I'm going to be curious to see what the Labor Day and Columbus Day crowds are going to be like.

 

[drizgirl]

And everybody's gotta eat, even if they won't be washing down their ronto wrap with blue milk.

They gotta eat, but it doesn't mean they're paying Disney prices to do it. They might buy a ronto wrap on their first visit, but not on their return visits. AP holders are far more likely to eat at home before heading to the park or wait to eat when they get home. If they need to eat during the day, they are far more likely to throw something from the pantry into their bag to avoid paying inflated Disney prices.

 

[Sirwalterraleigh]

That is not a good report on parks...

But...but....what about ROTR?!??!!

What makes it not good?

Anytime a CEO makes excuses...for anything...was the tip off.

Welcome to “Wall Street 101”

Attendance being down domestically should not be a surprise.

In an economic “boom”? With the “game changer” new lands just opening?

Right...that’s obvious to anyone.

We've been through this before with Wall Street and their concern for ESPN's loss of subs... which turned out to be such a no big deal that when D+ was announced, Wall Street was all very happy for Disney forgetting all about ESPN and bumping up their stock.

Then a quarter... just one quarter, that things didn't grow as fast (there was no backsliding) as was "predicted," then Wall Street is dumping on Disney.

Mind you, these investors who just boosted Disney this Spring and are now dumping Disney this Fall are speculators trying to "beat the market" with crazy amounts of buying and selling in ever shorter intervals of microseconds. If all investors agreed with them, Disney's stock would drop to nothing.

In that same article bemoaning Disney's shortfalls, it says....

• The company's Studio Entertainment segment reported revenues of $3.8 billion during the quarter, representing a 33% increase from the same period one year ago.
• Disney's Media Networks unit reported revenue of $6.7 billion, which is a 21% rise from the same quarter one year earlier.
• The company's Parks unit posted revenue of $6.6 billion during the quarter, marking a 7% rise from the third quarter of 2018.

It then goes on to mention the greater expenses and drag that streaming has had, which was as expected. Iger's been saying as much in the quarterly calls for a year. How this was unexpected by Wall Street is the great mystery here.

Hey, Wall Street speculators: Disney will have losses in streaming for year and be sinking the equivalent of some nations' GDP in capital improvement rather than buying back stock. So, sell off your Disney stock now and stop whining. In 2022 when there are record profits, you can come back and create a speculative bubble.

So espn’s drop in revenues and profits as part of the corporate portfolio...to the point where bob has had to acknowledge it, increase park prices exponentially to account for the void, and espn firing 3/4 of their staff that made over $10...was a “hoax”

#fakebusiness??

Record profits in 2022? How so?

Let me know in advance if you’re gonna say “for the 50th”...so I don’t spew coffee. Because that may be the biggest red herring in the history of Disney fan red herrings.

"Guest spending growth was primarily due to higher average ticket prices and increased food, beverage, and merchandise spending"

Where have I heard that before? Oh yeah, in seemingly the last 27 straight quarterly reports...

But there’s no ceiling...wdw is “going luxury” for the “guest”

Exactly. Everything in this report was hinted at by Iger previously and should have been expected by anyone paying attention. This is less the company missing expectations and more a failure of Wall Street and its analysts.

So Disney is “fighting city Hall” on this...that always works out well

 

[starri42]

They gotta eat, but it doesn't mean they're paying Disney prices to do it. They might buy a ronto wrap on their first visit, but not on their return visits. AP holders are far more likely to eat at home before heading to the park or wait to eat when they get home. If they need to eat during the day, they are far more likely to throw something from the pantry into their bag to avoid paying inflated Disney prices.

Fair enough, but while I'm sure the bulk of the passholders live within a reasonable commute from the park, I can't imagine they all do. And again, it supposes the increase in single-day admissions won't be sustained.

Since I have much less knowledge of Disneyland passholder behavior, especially with spending, are they prone to skip Blue Bayou or the Lamplight Lounge? It seems like I see a lot of vloggers eating there.

 

[larryz]

I'll obviously defer to you there. I just hope Disney learns the right lessons here... The surprising thing is that if they are that concerned, why they didn't retool a little for DHS...

Here's the lesson they're likely to learn...

 

[lazyboy97o]

Here's the lesson they're likely to learn...
View attachment 396400

Bob already tried that.

 

[drizgirl]

Fair enough, but while I'm sure the bulk of the passholders live within a reasonable commute from the park, I can't imagine they all do. And again, it supposes the increase in single-day admissions won't be sustained.

Since I have much less knowledge of Disneyland passholder behavior, especially with spending, are they prone to skip Blue Bayou or the Lamplight Lounge? It seems like I see a lot of vloggers eating there.

At DLR an awful lot of them live a reasonable commute distance from the park.

The Lamplight Lounge/Blue Bayou crowd is definitely there. But they aren't doing that on every visit. And they aren't the rank and file AP day guest.

 

[peter11435]

In an economic “boom”? With the “game changer” new lands just opening?



So Disney is “fighting city Hall” on this...that always works out well

They blocked out nearly all of their customers. That was a huge mistake for a business that largely lives off locals and regulars. I get that many in and outside of the company thought demand was high enough that people would come anyway but that was flawed thinking especially when the star attraction isn’t ready yet. There’s a difference between excuses and explanations/facts.

Fighting city hall rarely ends well but that doesn’t mean city hall is always right. People on here love to attack Disney/Iger for catering to Wall Street but they sure are quick to side with Wall Street when it suits their anti Disney/Iger agenda.

 

[Sirwalterraleigh]

They blocked out nearly all of their customers. That was a huge mistake for a business that largely lives off locals and regulars. I get that many in and outside of the company thought demand was high enough that people would come anyway but that was flawed thinking especially when the star attraction isn’t ready yet. There’s a difference between excuses and explanations/facts.

Fighting city hall rarely ends well but that doesn’t mean city hall is always right. People on here love to attack Disney/Iger for catering to Wall Street but they sure are quick to side with Wall Street when it suits their anti Disney/Iger agenda.

I’ll concede that...though the trackless is not gonna go off as the savior it’s being made out to be either.

I think you at least see the danger there. Pricing is what it is and the IP is where it is. Not enough people are buying.

Though most of the “valid” criticisms of iger are in fact valid.

He is overly aggressive for quarterly profits and doing so in a matter that may (probably...actually) leave whatever management that follows a slew of new problems that will trickle down to us.

 

[ToTBellHop]

They blocked out nearly all of their customers. That was a huge mistake for a business that largely lives off locals and regulars. I get that many in and outside of the company thought demand was high enough that people would come anyway but that was flawed thinking especially when the star attraction isn’t ready yet. There’s a difference between excuses and explanations/facts.

Fighting city hall rarely ends well but that doesn’t mean city hall is always right. People on here love to attack Disney/Iger for catering to Wall Street but they sure are quick to side with Wall Street when it suits their anti Disney/Iger agenda.

I have no agenda other than reporting on how actual management views the SWGE opening. They are deeply concerned which is leading to draconian cuts at DLR. I would not hope for a similar response in WDW. Of course they are being short-sighted and should play the long-game.

Then again, they were short-sighted to make the cuts they made to SWGE. It may be that the impact of not including the original trilogy is being over played. However, the appeal of these nerdy franchises (I don't mean this in a judgmental way. I have a Ravenclaw tattoo!) is the ability to live in fantasy worlds. Management clearly thought merely building the locations was enough, but go to a comic con and you'll see that it's not. People want to dress as though they are actually in this fantasy world and interact with others doing the same. It was extremely stupid to not allow guests to dress themselves and their children in Star Wars garb (as though it would be impossible to make it clear who is a CM--give me a break!) and interact with aliens. This SHOULD have been set up like a Star Wars renaissance fair where cosplay is encouraged.

You know, like the Wizarding World model.

The decisions made on execution here are mind-boggling, but they SHOULD be easy to rectify. The land itself is gorgeous. Hire some freakin' actors and let guests dress as they see fit!

This is the problem when all of the pencil pushers haven't been with the company for long enough and/or have no actual knowledge of the parks. Anyone who attended Star Wars Weekends before they were foolishly cut would know what actually appeals to us nerds.

Trowbridge certainly should have known given his work on the Wizarding World, and I gather he did know. But elements he pushed for were cut in the 9th inning.

 

[peter11435]

I’ll concede that...though the trackless is not gonna go off as the savior it’s being made out to be either.

I think you at least see the danger there. Pricing is what it is and the IP is where it is. Not enough people are buying.

Though most of the “valid” criticisms of iger are in fact valid.

He is overly aggressive for quarterly profits and doing so in a matter that may (probably...actually) leave whatever management that follows a slew of new problems that will trickle down to us.

I don’t think anyone is making it out to be a savior, But it is the superior attraction. The land doesn’t need a savior as it wil be just fine.

Why do you have low expectations for rise?

Everything else in your post is spot on.

 

[bartholomr4]

Thanks for this... Some items of interest from their earnings report last night, which is available now at SEC.gov include the following notes to the financial statement.

Last year through 9 months Disney reported $5.60 per share adjusted (as a reminder the share count was lower because the 21CF transaction hadn't closed. The comparable share results for 9 months this year is $5.98. (increase of 38 cents a share) Disney appeared to throw the kitchen sink in taking adjustments to the earnings to put alot of items behind them. Iger suggested this morning on CNBC the next quarter will include similar charges.

For grins, the adjustments outlined in the detailed report include:

• 43 cents a share for "Amortization of 21CF and Hulu intangible assets due to transaction closing and change in control of Hulu" (Basically the company is writing off the value of the film library quicker than 21CF had).
• 42 cents a share for "Restructuring and Impairment Charges" which is made up of Severence and equity based compensation related to layoffs (total of $869 Million in payments to severed employees). This is a pool to be used over two years, and is a one time charge to earnings
• 26 cents a share for "Impairment of equity investments" which represents moneys Disney will have to put into Hulu, that Comcast would have under the old ownership arrangement.
• Disney paid the US government $6.2 billion in tax obligations that arose from the spin-off of Fox from 21CF.

There isn't any discussion of Galaxy Edge impacting the forecasted earnings. While there may have been some negative impact of the launch at DL, in the grand scheme of things, the impact to revenue (over $50 Billion dollars in 9 months) is not material, nor is it the root cause of the earnings disappointment. The company is investing in a business (Disney +) which will not be returning revenue for another 90 days. Once this revenue starts to show up, the annual impact should be material, and it is reasonable to think the earnings will show up as promised.

One additional item from the balance sheet which is interesting to me, the cash investment into the parks and resorts (9 months to date this year vs last year) is $3.567 billion this year vs $3.264 billion last year.[/QUOTE][/QUOTE]