Disney’s Q3 FY24 Earnings Results Webcast

[Tony the Tigger]

Just took a look at the stock and…good lord. What a disaster.

Are you serious with this right now? Do you pay attention to the news?

 

[Disstevefan1]

And I completely disagree. I don't think the visits to Epic next year are going to include Disney for most people, and that has clicked with management (far too late). If a family of 4 decide to pop over to MK for the day, you are talking $750 FOR TICKETS ONLY. Then like $30 for parking, food, LL, etc. I think you are dreaming if you think people are going to come down, spend $4,000 to on Universal, then drop an extra $1,000 to visit MK for the day.

I agree. Families only have so much disposable income and only have so much vacation time.

In my opinion, EPIC will force families to make a choice.

It will be interesting to see what happens.

 

[Serpico Jones]

And D+ is profitable ahead of schedule. Of note to certain big mouths around here.

It is not yet profitable, and even when it does become profitable it won’t be much of a business. It’s certainly not the business that Iger sold to investors 5 or 6 years ago.

 

[DarkMetroid567]

UNI is also facing the inevitable 'wait for EPIC' impact... Disney isn't.

I think this argument is cope from the Universal fans. I won’t deny that people putting off their vacations for Epic exist (I’m certainly one of them) but the actual awareness of Epic Universe right now is still pretty low, mostly because the extent of Universal’s advertising has been the on-site preview center or some social media posts like the Dark Universe TikTok. I know EU seems ultra important to us because we are theme park fans, but most people still don’t know it exists. I expect that to change when Universal actually tries to advertise next year.

I even have friends in the Orlando area that don’t know Epic is happening. I was bewildered the first time it happened, but then it kept happening when I brought it up, lol.

 

[flynnibus]

I think this argument is cope from the Universal fans. I won’t deny that people putting off their vacations for Epic exist (I’m certainly one of them) but the actual awareness of Epic Universe right now is still pretty low, mostly because the extent of Universal’s advertising has been the on-site preview center or some social media posts like the Dark Universe TikTok

It's literally all over the web - including 3rd party content outside of theme park fan news.

It doesn't have to be the majority of people to have a material impact. Reality is, 'new stuff' is always a significant driver in amusement parks. UNI has almost nothing (besides the KidZone and Shrek replacements) because everything is going into EPIC.

It's materially significant - along with the general trends in travel.

 

[doctornick]

And D+ is profitable ahead of schedule. Of note to certain big mouths around here.

Not to be pedantic but streaming as a whole was profitable but D+ specifically was not. Though the trends suggest D+ itself will be functioning in the black soon enough.

 

[Nubs70]

Yes a number of folks were blinded by the light and closed minded thinking an all black cast in Black Panther movie would fail. The smart one in the room Iger thought otherwise.

Kind of think staffing would be a little challenging from an eeoc perspective.

 

[DarkMetroid567]

It's literally all over the web - including 3rd party content outside of theme park fan news.

It doesn't have to be the majority of people to have a material impact. Reality is, 'new stuff' is always a significant driver in amusement parks. UNI has almost nothing (besides the KidZone and Shrek replacements) because everything is going into EPIC.

It's materially significant - along with the general trends in travel.

All over *your* web, sure. But the internet has gotten astoundingly insular and curtails to your personal interests more than it ever did. I think you’ll find that if you talk to people in real life the topic is not as present as it is on your computer.

I don’t disagree that Epic is a huge deal for Universal and that it’s going to be a booster for the company in the long-term. But I think if you’re expecting next year to be an opening of the floodgates and a money printer for Universal, I think you need to wait until 2027-28.

 

[flynnibus]

All over *your* web, sure. But the internet has gotten astoundingly insular and curtails to your personal interests more than it ever did. I think you’ll find that if you talk to people in real life the topic is not as present as it is on your computer.

Sorry - but please don't insult me by thinking I'm obvious to tailored advertising. I can tell the difference between 'my news' and the front page of a general publication.

I don’t disagree that Epic is a huge deal for Universal and that it’s going to be a booster for the company in the long-term. But I think if you’re expecting next year to be an opening of the floodgates and a money printer for Universal, I think you need to wait until 2027-28.

Well considering I never said anything of the sort... I'd don't know why you'd believe I'd think that.

My contribution to this thread was discussing the delay contributor to UNI's current attendance -- not what EPIC will be.

 

[DarkMetroid567]

Sorry - but please don't insult me by thinking I'm obvious to tailored advertising. I can tell the difference between 'my news' and the front page of a general publication.

Apologies and def not my intention, but then surely you realize why your initial claim wasn’t too convincing. Additionally, there really isn’t too much exposure in the form of a general publication — a short headline on the third scroll of CNN’s homepage is not exactly gangbusters advertising for EU.

Well considering I never said anything of the sort... I'd don't know why you'd believe I'd think that.

My contribution to this thread was discussing the delay contributor to UNI's current attendance -- not what EPIC will be.

Fair enough, but I think the reason we’re having this discussion in the first place is the supposed explanatory nature these subjects share.

 

[Tha Realest]

Not to be pedantic but streaming as a whole was profitable but D+ specifically was not. Though the trends suggest D+ itself will be functioning in the black soon enough.

The “profitable” part of their streaming portfolio is going to cost them a lot of money.

 

[Vegas Disney Fan]

The “profitable” part of their streaming portfolio is going to cost them a lot of money.

It’ll be curious to see if it pays off long term, there was a time I’d have said streaming services were the future and D+ was a good move because it future proofed Disney from the inevitable demise of cable, now that streaming is incorporating all the bad aspects of cable I think people may ultimately just stick with cable as the lessor of two evils. If streaming ends up remaining a niche market D+ may be profitable on a quarterly level but never recoup the tens of billions it cost to create it.

 

[Nubs70]

I agree. Families only have so much disposable income and only have so much vacation time.

In my opinion, EPIC will force families to make a choice.

It will be interesting to see what happens.

With a decrease in disposable income, the family that reliably make yearly trips will switch to bi yearly trips. The interval between trips will increase for those that do every 2 years etc...

Facing decreased frequency of trips, where will you visit? Somewhere that has nothing new to offer or another place that has shiny new offerings?

 

[BrianLo]

who thought it would fail because of the race and color of those in the movie? no one...

Ike Perlmutter

 

[BrianLo]

It is not yet profitable, and even when it does become profitable it won’t be much of a business. It’s certainly not the business that Iger sold to investors 5 or 6 years ago.

Iger sold them on a service profitable by end of FY24 with 60-90 million subscribers.

You are confusing Chapek who said there would be 215-245 and we have a lot of documentation there was a huge falling out with the board over this.

 

[Trauma]

Are you serious with this right now? Do you pay attention to the news?

Says the guy who hasn’t noticed the market has rebounded, but Disney has not.

 

[Disney Analyst]

I know many disagree with this person, heck some of their takes have made me side eye, but I thought this was interesting. Curious what our community feels of this perspective?



The full thread:

Since Disney's $DIS earnings were released, there has been a lot of talk about the stock price.
Which can be confusing bc the stock is down around 30% from April's high, even though Disney has released two record shattering films: Inside Out 2 and Deadpool vs Wolverine.
1/25

While Disney's stock is doing better than any other legacy media companies this year, Comcast/Universal and Sony are down TWICE as much as Disney and don't even talk about Warner Bros Disc or Paramount.
Netflix is way up, but they don't deal with linear tv or theaters.
2/25

So, yay Disney for being the best of the legacy studios. BUT, it's no win to be down 4% ytd when both the NasDaq and S&P500 are both up 12% and the Dow Jones is actually +4% (Disney was the best performer in the Dow earlier this year).
3/25

It is important to note that S&P and Nasdaq were both HEAVILY buoyed by being cap-weighted and including Microsoft, Nvidia, Google, Facebook (Meta), Amazon and Apple.
But none of those excuses matter if you're a Disney shareholder. So what's going on?
4/25

First, it is clear that media is a tough business right now. WBD, Para, Comcast/Uni, Sony... they're all struggling. Even the latter two who have strong broadband and tech divisions.
The rapid decline in linear television has been MUCH faster than the growth of streaming.
5/25

It also hasn't been great that the box office has been a bit more anemic than pre-Covid. Sure, Inside Out 2 is the highest grossing animated film of all time, Deadpool v W has broken R rating records, Avatar 2 top three all-time, etc.
But..
6/25

But, the middle of the box office has fallen off. Sure. there are blockbusters, but the constant flow of romcoms, some horror, and coming of age films have been pushed to streaming. Taking a small, but important, cut from box office receipts.
7/25

Then again, box office receipts have never been huge revenue drivers for Disney. Remember, they split the box office with exhibitors and the marketing budgets are huge, so a "haircut in box office receipts" is not really Disney's main problem. Their films do great.
8/25

The biggest issues are:
1. Linear decline (this can't be understated, ABC, ESPN, Disney Channel, and the local affiliates were CASH COWS, probably 95% of Disney's current issue)
2. Cost of competing in streaming (launching D+, integrating Hulu)
...
9/25

3. Cost of sports (this connects to Linear decline and cost of launching streaming. Sports rights are spiking all while revenue from owning networks that air sports is drying up.
4. Theme Parks are no longer considered growth division (they never should've been)
10/25

The real story is primarily #1 Linear decline, #2 Cost of streaming, and #3 Sports costs... those three combined is basically the entire story of legacy media issues.
But I want to dive into #4, Disney's theme park division. As this has spurred a lot of confusing takes.
11/25

Disney's Parks division have been beaten up. They were fully shut down a few years ago, there was a multi-year reopening, all in the middle of some major expansion projects.
All of this at a time when Disney was launching their streaming to quickly replace fading linear.
12/25

Disney had no option but to lean heavily into their theme parks to help replace the lost box office from theater shutdowns, the lost revenue from the earlier park closures, the fading revenue from linear, the increase cost of sports, and cost of launching streaming.
13/25

After they reopened, Parks quickly caught up to pre-covid levels of revenue, and Disney was forced to tout parks as a sign of growth, since steaming was not making a profit and linear was clearly fading away.
This worked and investors were impressed with revenue growth.
14/25

But the parks were never meant to be a growth division. They were Disney's "work horse," chugging away every day and bringing in reliable revenue, hand in hand with linear, to help fund buying Marvel, Lucasfilm, Pixar, and 20th Century Fox.
15/25

As investors started worrying about the cost of streaming and linear decline, Disney understandably pointed to their theme park revenue growth. It was impressive and helped settle investors fears.
But investors started to expect too much from the theme parks.
16/25

Look at the headlines from this week, one would think Disney theme parks were burning down. In reality, the division grew 2% YoY last quarter, generating $200m more than last summer. Which is solid for a legacy division of a legacy company, but not for a growth division.
17/25

The 2% GROWTH in rev is even more impressive when compared to Universal theme parks, that saw a 10% DECLINE in revenue over the same period.
So Disney parks are staying strong, a slight single digit dip in revenue is expected next qtr, but the bottom is not falling out.
18/25

Why is the stock getting battered if things are "just fine?" Well, investors have grown to expect big growth from the parks, even if it defied logic.
There is only so much that this division can grow year over year.
19/25

Disney's parks should be looked at as a reliable workhorse that can be "juiced" occasionally for short-term cash needs, rather than a division that can maintain double digit growth year after year.
Even with massive expansions, there is a limit to growth and growth rate.
20/25

Disney's parks are unique bc they're also extremely sensitive to macro economic pressures. A downtown in the US economy (or China, Japan, and France) has immediate effects on the parks.
Folks cut and postpone travel in tough times, before they cut streaming services.
21/25

So if investors need to think of Disney's parks as reliably stable w/ strong earning capacity, but a limited growth rate, where should they look for Disney's growth potential?
And that my friends, is where we are today.
Disney's stock price is stalled b/c of this question.
22/25

Their biggest growth opportunity is obviously streaming, but this division (DTC) is not only nascent and only JUST profitable, it is also simply a replacement for a diminishing linear division.
So is streaming really growth, if it is just supplementing a dying medium?
23/25

I would argue, yes. BUT, not yet.
Disney has huge potential for massive growth in their DTC division, but it is not going to happen anytime soon. But they are heading in the right direction. It is just going to be extremely expensive and will take time.
24/25

Another growth area is Disney's cruise division. It is wildly popular and ranked highest among guests for their unmatched service.
They have three new ships coming in the next few years. This will help boost the Parks division. The problem is that these ships are VERY expensive and take YEARS to complete.
So, should Disney launch the three new ships and let their small fleet of 8 work for a few years to boost some cash flow before spending more to build more ships?
That will take 5-10 years.
Or should they boost their construction of new ships to expand their share in the cruising industry?
That will cost billions.
It isn't an easy decision. Does Disney allow itself to become a value stock, generating reliable dividends, or should it push itself to be seen as a growth company, but risking their short term cash flow?
Investors seemed to want the latter. Pushing Disney to spend spend spend on streaming, but then they pulled the rug out and it cost Bob Chapek his job.
While misguided fans like to call Chapek cheap, he was literally pushed out because investors said he was over-spending.
So that doesn't seem like a good route.
So, what? Do they throw the car in neutral and take a hit in the stock price short term and clearly move to a legacy reliable 100+ year old company and let the kids (Netflix) and tech companies (Apple, Amazon) fight over who is the real maverick in media?
There is no clear answer. Investors are not clear about what they want and Disney seems a little hesitant to go all in either way. Either all in or all out.
So, here we sit with a stock price in the mid $80s. Wiggling up to 90 every now and then.
I know folks are hoping to get some guidance at D23, and they night get some, but I don't see an easy answer.
As a huge Disney fan, I hope they throw fiscal conservatism out the window and lean very heavily in theme park, cruise ship, and streaming investments. Taking a huge hit in cash flow, but knowing the long term gain will be there.
But, if I set my "fan hat" aside and look at the company from a strict investment perspective, I don't know if it is really that bad of an idea to let things marinate a bit. Let the cruise shjps launch and grow, let the international park expansions settle, let the streaming services consolidate, sell off some assets, and continue to release big movies that help drive interest in parks, streaming services, and consumer products.
Whichever they decide to do, I hope they make it clear soon.
I don't think the stagnant stock price is because of anything Disney is doing wrong, rather, I think it is due to Disney not making it clear where they're going from here. All in...? Neutral and coast...?
Pick a lane and fully commit.
25/25

 

[todd23]

I even have friends in the Orlando area that don’t know Epic is happening. I was bewildered the first time it happened, but then it kept happening when I brought it up, lol.

I recently mentioned Epic Universe to some co-workers and all three of them were completely unaware. It's a small sample size, but it's a sample.

 

[Tha Realest]

I know many disagree with this person, heck some of their takes have made me side eye, but I thought this was interesting. Curious what our community feels of this perspective?



The full thread:

My generally inclination is to distrust someone that both sets themselves out as a master of many trades in their social media profile and is a relentless cheerleader for a certain company.

 

[Tony the Tigger]

I know many disagree with this person, heck some of their takes have made me side eye, but I thought this was interesting. Curious what our community feels of this perspective?



The full thread:

The stock market price is wholly irrelevant right now as the entire market took an odd blip down a couple of days ago. You can’t draw any conclusions about any individual stock under those circumstances IMO.