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

[Daveeeeed]

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.

Give Soccer a chance. The sport is marvelous and IMO is far better than watching a 4-hour American Football game lol.

America is growing into Soccer as we become more diverse, and as the public realizes it is a safer alternative to more dangerous sports like Football and Lacross. But the main driver is differing opinions. There is an audience for Soccer, and they are capitalizing on it like they should.

You should actually be glad a streaming service is in the works... that way, in most cases, there won't be any compromises in coverage.

 

[ford91exploder]

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.

Just for giggles check out www.go.com 19 years and Disney STILL has not integrated it into the Disney.Com domain. World class IT there

 

[ford91exploder]

Give Soccer a chance. The sport is marvelous and IMO is far better than watching a 4-hour American Football game lol.

America is growing into Soccer as we become more diverse, and as the public realizes it is a safer alternative to more dangerous sports like Football and Lacross. But the main driver is differing opinions. There is an audience for Soccer, and they are capitalizing on it like they should.

You should actually be glad a streaming service is in the works... that way, in most cases, there won't be any compromises in coverage.

I like PLAYING sports, I HATE WATCHING THEM.

 

[rael ramone]

More thoughts:

First, let's see Ritchie Greenberg's thoughts:

https://www.cnbc.com/video/2017/08/...iant-despite-its-disney-road-bump.html?play=1

He wonders why ABC TV head Ben Sherwood still has a job.....ouch....

I now have even more skepticism of the new Disney Streaming Channel then I did before...

While $DIS might be late to the streaming party, I still think it's still the right decision to go that way for sports content. The more I think about Amazon, the more I think it is heading for a legislative roadblock.

For $DIS to go to zero, it would take a macro event so huge that it not only slams them, but any and all potential buyers out there. Without that kind of meltdown taking place, if they were to get much, much cheaper, they would get bought, perhaps even via hostile takeover. And as buyer of last resort there's always Papa Warren (imagine Mickey hawking Geico Insurance or See's Candy)...

 

[ford91exploder]

More thoughts:

First, let's see Ritchie Greenberg's thoughts:

https://www.cnbc.com/video/2017/08/...iant-despite-its-disney-road-bump.html?play=1

He wonders why ABC TV head Ben Sherwood still has a job.....ouch....

I now have even more skepticism of the new Disney Streaming Channel then I did before...

While $DIS might be late to the streaming party, I still think it's still the right decision to go that way for sports content. The more I think about Amazon, the more I think it is heading for a legislative roadblock.

For $DIS to go to zero, it would take a macro event so huge that it not only slams them, but any and all potential buyers out there. Without that kind of meltdown taking place, if they were to get much, much cheaper, they would get bought, perhaps even via hostile takeover. And as buyer of last resort there's always Papa Warren (imagine Mickey hawking Geico Insurance or See's Candy)...

For Disney to go to zero all that's necessary is Media Networks to go revenue negative which based on current loss rates will be somewhere in 2019-2020, Disney has such huge contractual obligations for sports rights which are not supported by the current market. ESPN has always been supported by 80 million households who DO NOT WATCH their product.

WHEN NOT IF Media Networks go revenue negative Disney will need to fund ESPN with literally billions to pay for the poor package of sports rights they have vastly overpaid for.

The real market for ESPN is about 20-30 million households, Various market studies show that with todays costs the monthly fee would be about 37-39 bucks. Unfortunately those households are only willing to pay a maximum of 8 bucks. (I've sourced this a bunch of times before search is your friend)

On FBN's Varney and Co the discussion was that Disney needs to SELL ESPN because they feel it's dragging Disney down. unfortunately they also noted that no one is interested in buying it because of the deteriorating fundamentals. One suggestion is to spin off ESPN into it's own company and to let it sink or swim.

Without that Disney's only option is bankruptcy so the rights packages can be re-negotiated to a more realistic figure and that's going to have huge knock on effects in the NBA and NFL.

 

[HauntedPirate]

Give Soccer a chance. The sport is marvelous and IMO is far better than watching a 4-hour American Football game lol.

America is growing into Soccer as we become more diverse, and as the public realizes it is a safer alternative to more dangerous sports like Football and Lacross. But the main driver is differing opinions. There is an audience for Soccer, and they are capitalizing on it like they should.

You should actually be glad a streaming service is in the works... that way, in most cases, there won't be any compromises in coverage.

I have given it a chance. I used to play in my younger years (late teens and early 20's). I have a hard time thinking of a bigger waste of time these days than watching a soccer match. I literally have zero interest in it. I would enjoy going to a match in Europe, for the experience, but that's it. So that's my story and I'm sticking to it. I understand there's an audience for soccer, I'm just not someone in that audience.

I agree that a streaming service coming is overall a good thing. As mentioned in my last post, though, I can't shake the feeling that Disney is late to the streaming party and they aren't going to get the adoption rate they think they'll get as a result.

 

[ford91exploder]

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.

Please note that Disney is NOT offering the huge discounts to DL or DCL guests, Just WDW.

P&R also includes DL and DCL where they are having a GREAT summer, I agree it would be interesting to see the results for each park broken out.

 

[Daveeeeed]

I like PLAYING sports, I HATE WATCHING THEM.

With the exception of the Superbowl, The World Cup, and The Olympics I agree 100%. Watching them on TV is overrated, but I think streaming the games is the best way to go.

 

[ford91exploder]

With the exception of the Superbowl, The World Cup, and The Olympics I agree 100%. Watching them on TV is overrated, but I think streaming the games is the best way to go.

Skipped the Superbowl as it's become an adfest with little on the field action, World Cup - not interested, Olympics in the US have become unwatchable because of the poison brew of schedule/too many ads and talking heads/and too little actual competition.

 

[GoofGoof]

Please note that Disney is NOT offering the huge discounts to DL or DCL guests, Just WDW.

P&R also includes DL and DCL where they are having a GREAT summer, I agree it would be interesting to see the results for each park broken out.

Not buying your story. See post below:

I'm suspicious that the domestic attendance increase was due to the discounted Disneyland tickets that were available 1/9 through 5/22.

Here's a chart that shows the year-over-year crowd level change (using our crowd scale) for Disneyland, accounting for the ride closures. I've put December '16 in for context.

View attachment 221552

YoY attendance was basically flat in December '16 compared to December '15. Disneyland got a huge YoY spike in attendance in May 2017, the last month those discounted tickets were able to be used. (There was also a block-out in mid-April.) You can see the fall-off over the last 2 months.

In short, we think the ticket sale shifted Disneyland demand to earlier in the year. It hasn't increased attendance that much.

ETA: I could be wrong.

Where are these rock bottom discounts WDW is giving away? I'll take some

 

[ford91exploder]

Disney to lose up to2 Billion per year while starting up streaming service

http://www.marketwatch.com/story/disneys-plan-for-espn-is-shrouded-in-uncertainty-2017-08-09

Yep the Analysts are finally not buying what's Disney's selling, They don't think Disney has what it takes to launch that streaming service, Guess they should have saved some of that cash they poured down the buyback rathole.

 

[Matt_Black]

Disney will be fine, IF they go all-in with the content they make available. That means dig out the stuff from the vault- the old TV series and specials, movies that haven't been seen in years (Song of the South), etc.

 

[Kingtut]

Disney will be fine, IF they go all-in with the content they make available. That means dig out the stuff from the vault- the old TV series and specials, movies that haven't been seen in years (Song of the South), etc.

I don't think the real issue is the Disney content available ( at least for a few years) but rather what they are putting on ESPN Mobile ( or whatever it will be called) Most cable subscribers just paid the 6-7 dollars per month as part of the overall fee and only a portion of them only wanted sports, sports, and more sports ( see the Axe throwing competition at 3 AM). But if the sports junkies can get their fix from the dedicated ESPN streaming then they too have another reason to cut the cord and not pay twice. ESPN is already down about 15mil subscribers from their peak and on a downward slope. I don't see how Disney replaces this monthly income at an equivalent amount.

I also believe that Disney is not the most technologically nimble company and no matter who they purchase the Disney culture will not permit the techies to respond in a timely enough way. Someone posted back a few pages about Microsoft Silverlight being out of date for this - I can just see some Disney MBA saying we should keep using it because the developers are now so cheap to hire. It just doesn't work like that out here in the fiber optic cable jungle.

 

[jakeman]

For Disney to go to zero all that's necessary is Media Networks to go revenue negative which based on current loss rates will be somewhere in 2019-2020, Disney has such huge contractual obligations for sports rights which are not supported by the current market. ESPN has always been supported by 80 million households who DO NOT WATCH their product.

WHEN NOT IF Media Networks go revenue negative Disney will need to fund ESPN with literally billions to pay for the poor package of sports rights they have vastly overpaid for.

The real market for ESPN is about 20-30 million households, Various market studies show that with todays costs the monthly fee would be about 37-39 bucks. Unfortunately those households are only willing to pay a maximum of 8 bucks. (I've sourced this a bunch of times before search is your friend)

On FBN's Varney and Co the discussion was that Disney needs to SELL ESPN because they feel it's dragging Disney down. unfortunately they also noted that no one is interested in buying it because of the deteriorating fundamentals. One suggestion is to spin off ESPN into it's own company and to let it sink or swim.

Without that Disney's only option is bankruptcy so the rights packages can be re-negotiated to a more realistic figure and that's going to have huge knock on effects in the NBA and NFL.

Just to be clear, you are saying that Disney will file for bankruptcy by 2019 if they don't sell ESPN?

 

[Chef Mickey]

Disney to lose up to2 Billion per year while starting up streaming service

http://www.marketwatch.com/story/disneys-plan-for-espn-is-shrouded-in-uncertainty-2017-08-09

Yep the Analysts are finally not buying what's Disney's selling, They don't think Disney has what it takes to launch that streaming service, Guess they should have saved some of that cash they poured down the buyback rathole.

Out of 31 analysts, 17 have an outperform/buy rating on the stock, 12 holds, and 2 sells.

BTIG is a nothing firm and Richard Greenfield is a long time Disney bear and overall loser. He's bullish on Twitter, a company with the most incompetent management around.

Disney is not going to "lose $2b/yr" unless they are replacing it on the other side. $2b/yr is over 20% of their profit. Not going to happen and your bearishness has just gone overboard with your 2019 prediction.

Disney is facing the cord cutting issue head on and has some of the strongest content if not the best in the industry. They will get through this and will open up other revenue streams in the process. This was inevitable and instead of being victims, they are making bold decisions. Disney isn't going "Revenue Negative" on media networks anytime soon. Their bad quarter just showed only a 1% y/y decline in revenues for media networks.

I mean, short the stock if you're so sure it's doom and gloom. There are worse companies out there to be this bearish about...wow.

 

[MisterPenguin]

Just to be clear, you are saying that Disney will file for bankruptcy by 2019 if they don't sell ESPN?

And go bankrupt in 2018, and 2017, and 2016.... The goalposts for Disney's economic collapse keep moving.

 

[flynnibus]

HBO's advantage is it shows other studios' movies. Unless Disney goes all out and opens their entire vault, it'll be hard to compete.

(On the other hand, if it includes Marvel and Lucasfilm, that would change some things...)

Movies they can see all over the place...

HBO original content is a huge driver of their subscriber base.

 

[flynnibus]

Streaming is the future but won't be if everyone has to subscribe to 20+ services at $10 a month to watch what they want.

That's what you get when people think a 5-10/mon service is going to replace a network that consolidated dozens of content streams.

You can't charge 10-20 and pay everyone... so people seek out their own revenue feed

 

[ford91exploder]

I don't think the real issue is the Disney content available ( at least for a few years) but rather what they are putting on ESPN Mobile ( or whatever it will be called) Most cable subscribers just paid the 6-7 dollars per month as part of the overall fee and only a portion of them only wanted sports, sports, and more sports ( see the Axe throwing competition at 3 AM). But if the sports junkies can get their fix from the dedicated ESPN streaming then they too have another reason to cut the cord and not pay twice. ESPN is already down about 15mil subscribers from their peak and on a downward slope. I don't see how Disney replaces this monthly income at an equivalent amount.

I also believe that Disney is not the most technologically nimble company and no matter who they purchase the Disney culture will not permit the techies to respond in a timely enough way. Someone posted back a few pages about Microsoft Silverlight being out of date for this - I can just see some Disney MBA saying we should keep using it because the developers are now so cheap to hire. It just doesn't work like that out here in the fiber optic cable jungle.

No it doesn't. But Disney thinks its does.

 

[ford91exploder]

Disney will be fine, IF they go all-in with the content they make available. That means dig out the stuff from the vault- the old TV series and specials, movies that haven't been seen in years (Song of the South), etc.

But they will not go all it