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

ParentsOf4

Well-Known Member
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.
Disney's operations did manage a small profit.

What went down the toilet was their International Channels business. They spent billions to get it going but the business model fell apart. They are dumping it and switching to Direct-To-Consumer (DTC).

Previously, they valued their Asia-Pacific channels as worth $5 Billion. They are now saying it's a loser and they are dumping it. As a result, they have to write off that asset as an impairment. An impairment is a permanent reduction in the value of a company asset. That's written off against the company's profits. As a result, corporate Disney as a whole lost money, a lot of it.

Operating margin (profit or loss) has to do with revenue taken in by the company versus what it cost to generate that revenue. By this measure, Disney achieved a small profit.

Let's say you run a cab business and you have a fleet of 10 cabs. You collected $100K in revenue and it only cost you $90K to operate those cabs, then your operations were profitable by $10K.

But now let's say one of those cars was destroyed by a Kraken and you didn't buy Kraken insurance. That cab was worth $20K so you have to write it off. As a result, your business lost $10K.

This is what happened to Disney. Disney's operations made a little bit of money but corporate Disney lost a boatload.
 
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DVCakaCarlF

Well-Known Member
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Maybe they'll keep buying new content companies every year and changing products so they can bury any real numbers in countless exclusions and credit as a regular strategy to their public reporting... It's never ending...
It’s typical of large corporations...be thankful there even is a TWDC, and it hasn’t been absolved by Warren Buffet.
 

brianstl

Well-Known Member
This is inaccurate.

Disney's operations did manage a small profit.

What went down the toilet was their International Channels business. They spent billions to get it going but the business model fell apart. They are dumping it and switching to Direct-To-Consumer (DTC).

Previously, they valued their Asia-Pacific channels as worth $5 Billion. They are now saying it's a loser and they are dumping it. As a result, they have to write off that asset as an impairment. An impairment is a permanent reduction in the value of a company asset. That's written off against the company's profits. As a result, corporate Disney as a whole lost money, a lot of it.

Operating margin (profit or loss) has to do with revenue taken in by the company versus what it cost to generate that revenue. By this measure, Disney achieved a small profit.

Let's say you run a cab business and you have a fleet of 10 cabs. You collected $100K in revenue and it only cost you $90K to operate those cabs, then your operations were profitable by $10K.

But now let's say one of those cars was destroyed by a Kraken and you didn't buy Kraken insurance. That cab was worth $20K so you have to write it off. As a result, your business lost $10K.

This is what happened to Disney. Disney's operations made a little bit of money but corporate Disney lost a boatload.

You better look at that report again. The $5 billion isn’t booked as a loss.
 

DVCakaCarlF

Well-Known Member
This is inaccurate.

Disney's operations did manage a small profit.

What went down the toilet was their International Channels business. They spent billions to get it going but the business model fell apart. They are dumping it and switching to Direct-To-Consumer (DTC).

Previously, they valued its Asia-Pacific channels as worth $5 Billion. They are now saying it's a loser and they are dumping it. As a result, they have to write off that asset as an impairment. An impairment is a permanent reduction in the value of a company asset. That's written off against the company's profits. As a result, corporate Disney as a whole lost money, a lot of it.

Operating margin (profit or loss) has to do with revenue taken in by the company versus what it cost to generate that revenue. By this measure, Disney achieved a small profit.

Let's say you run a cab business and you have a fleet of 10 cabs. You collected $100K in revenue and it only cost you $90K to operate those cabs, then your operations were profitable by $10K.

But now let's say one of those cars was destroyed by a Kraken and you didn't buy Kraken insurance. That cab was worth $20K so you have to write it off. As a result, your business lost $10K.

This is what happened to Disney. Disney's operations made a little bit of money but corporate Disney lost a boatload.
Was that cab worth $20,000, after capitalizing depreciation?
 

DVCakaCarlF

Well-Known Member
This isn’t pointed at anyone here, but I would advise everyone to look up some accounting principles (Wikipedia is fine) regarding GAAP.

These quarterly calls are “snapshots” of a very small window in time. It takes years for small businesses to make a profit, and it will years for TWDC to realize any profits and losses on their operations. Rome wasn’t built in a day, and TWDC won’t close because of a bad quarter or two.

Income statement and balance sheet are good places to start.
 

ImperfectPixie

Well-Known Member
Not if you wait a few months more you don't.
Comcast has been using this model for years already. New releases first show for purchase usually at $19.99 when the film is available for digital purchase. Shortly after, they appear on the paid movie channels and OnDemand for those who have the paid movie channels or for rent for $5.99 for those who don't have them. MONTHS later, they show up in the OnDemand that's free for all subscribers.
 

doctornick

Well-Known Member
Imagine paying for a year or three upfront, only to find out you need to spend more $ to watch certain content.

That seems like an odd way to look at it. No one signing up for Disney+ would have been expecting first run theatrical experiences to premier on the platform. Mulan will surely end up (for "free") on Disney+ at some point once the theatrical run equivalent of VOD ends.
 

Patcheslee

Well-Known Member
This is inaccurate.

Disney's operations did manage a small profit.

What went down the toilet was their International Channels business. They spent billions to get it going but the business model fell apart. They are dumping it and switching to Direct-To-Consumer (DTC).

Previously, they valued their Asia-Pacific channels as worth $5 Billion. They are now saying it's a loser and they are dumping it. As a result, they have to write off that asset as an impairment. An impairment is a permanent reduction in the value of a company asset. That's written off against the company's profits. As a result, corporate Disney as a whole lost money, a lot of it.

Operating margin (profit or loss) has to do with revenue taken in by the company versus what it cost to generate that revenue. By this measure, Disney achieved a small profit.

Let's say you run a cab business and you have a fleet of 10 cabs. You collected $100K in revenue and it only cost you $90K to operate those cabs, then your operations were profitable by $10K.

But now let's say one of those cars was destroyed by a Kraken and you didn't buy Kraken insurance. That cab was worth $20K so you have to write it off. As a result, your business lost $10K.

This is what happened to Disney. Disney's operations made a little bit of money but corporate Disney lost a boatload.
I have to sit through quarterly earnings meetings (as a lowly shop floor worker where we all just say "what in the heck does half of this even mean"), thank you for finally putting things in layman's terms.
And at this point in 2020 a Kraken could very well destroy my car ;)
 

Animaniac93-98

Well-Known Member
That seems like an odd way to look at it. No one signing up for Disney+ would have been expecting first run theatrical experiences to premier on the platform. Mulan will surely end up (for "free") on Disney+ at some point once the theatrical run equivalent of VOD ends.

But that "first run theatrical experience" will be no different than when it's "free". You're paying $30 to watch it early. That's the only benefit to paying extra for it.
 

techgeek

Well-Known Member
That seems like an odd way to look at it. No one signing up for Disney+ would have been expecting first run theatrical experiences to premier on the platform. Mulan will surely end up (for "free") on Disney+ at some point once the theatrical run equivalent of VOD ends.

No one expected to find first run on their + homepage, but then Disney went ahead and set a precedent by pushing Onward and Hamilton right up there with great fanfare.

How is it that both of those titles - an A-list Pixar flick and the long awaited premiere of the OBC recording - rate ‘monthly included feature’ billing while Mulan demands a premium? Onward could have held its own on a ‘trolls style’ release, and Hamilton was originally rumored to be destined for a premium ‘event’ release before going wide... and certainly could have commanded $30 from its massive fanbase.

I get that Hamilton especially was about driving subs, but they could have had their cake and eaten it twice... especially for what Bob spent to bring in on board. And now, people will expect the first-run parade to continue and feel understandably fleeced when the credit card page pops up.
 

DVCakaCarlF

Well-Known Member
I have to sit through quarterly earnings meetings (as a lowly shop floor worker where we all just say "what in the heck does half of this even mean"), thank you for finally putting things in layman's terms.
And at this point in 2020 a Kraken could very well destroy my car ;)
Unfortunately, Accounting 101 is not part of the core curriculum for most colleges and universities.
 
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