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

[UNCgolf]

Like Art History?

I don't know of any schools where art history is part of the required curriculum for all students.

Doesn't mean they don't exist, though.

Personally, I think requiring statistics would be more valuable than any other math class (or really anything else at all). Far too many people don't understand statistics at all and are thus very easily misled, misinformed, etc. about a wide variety of issues.

 

[DVCakaCarlF]

With respect, this isn't a clear description of how depreciation is used in business accounting. Modern accrual accounting requires a matching of expenses and revenues within the period - and depreciation is a necessary component of that. Depreciation allows you to spread out the cost of an asset over its useful life so that the revenue earned in a given period with that fixed asset can match a small portion of the asset's initial expense. It's not categorized as a loss, as you describe above. It's an adjustment.

The word has been used by non-accounting folk to categorize the drop in the resale value of the asset....and while the textbook definition of depreciation fits for lay people needing to refer to the devaluing of their car, or whatnot - businesses use depreciation differently for the purpose I outlined above.

“Non accounting folk” - let me get my “cones of dunshire” game board and hat out.

 

[DVCakaCarlF]

I don't know of any schools where art history is part of the required curriculum for all students.

Doesn't mean they don't exist, though.

I have an accounting degree from Winthrop, and I had to sit through that .

 

[UNCgolf]

I have an accounting degree from Winthrop, and I had to sit through that ****.

Was art history itself specifically required, though? My guess is there was some general humanities type requirement and that was just the course you took to fulfill it based on your schedule or whatever, but maybe not!

My undergrad degree at UNC was in history, but we were still required to take a math class as part of the general curriculum.

 

[ParentsOf4]

This is cap from the report. Unless I am reading this incorrectly the $5 billion impairment is being reported as income.

The line immediately before the image you posted reads:

"The following table reconciles reported diluted EPS from continuing operations to diluted EPS excluding certain items affecting comparability for the third quarter:"​

The table is a reconciliation to explain how Disney got to this statement:

"Excluding certain items affecting comparability, diluted EPS for the quarter decreased 94% to $0.08 from $1.34 in the prior-year quarter."​

As a reconciliation, the numbers get reversed.

Disney is trying to present in the best light possible that their day-to-day business operations (i.e. their segments) did well, all things considered:

Disney's "continuing operations" (which includes all segments that have not been discontinued) lost a great deal.

But their day-to-day operations did better than expected.

Sorry in advance if I'm only adding to the confusion by mixing "continuing operations" with (day-to-day) "operations". I really should use the term segments, not "operations" to avoid confusion.

Disney is trying to get across the point that their business segments did OK.

 

[larryz]

When Universal and pre Disney Fox were in talks with theaters over PVOD a couple years ago, they were looking at $60-70 for a day and date rental.

That could be termed "robbery."

 

[brianstl]

@ParentsOf4 maybe you can help comment on this, because I’m not entirely positive why this is being shown this way.

Normally, impairments are shown as an negative or in parenthesis on income statements. My understanding is that the “sum” of taking these charges resulted in a profitable transaction.

It’s not a good answer, but it’s all I got at the moment.

Want even more to add to mix? On the 10 Q they have $4.953 billion as positive revenue under operating activities from goodwill and intangible asset impairments.

 

[MisterPenguin]

The line immediately before the image you posted reads:

"The following table reconciles reported diluted EPS from continuing operations to diluted EPS excluding certain items affecting comparability for the third quarter:"​

The table is a reconciliation to explain how Disney got to this statement:

"Excluding certain items affecting comparability, diluted EPS for the quarter decreased 94% to $0.08 from $1.34 in the prior-year quarter."​

As a reconciliation, the numbers get reversed.

Disney is trying to present in the best light possible that their day-to-day business operations (i.e. their segments) did well, all things considered:

View attachment 489055

Disney's "continuing operations" (which includes all segments that have not been discontinued) lost a great deal.

But their day-to-day operations did better than expected.

Sorry in advance if I'm only adding to the confusion by mixing "continuing operations" with (day-to-day) "operations". I really should use the term segments, not "operations" to avoid confusion.

Disney is trying to get across the point that their business segments did OK.

Poor Disney, their business segments only profited $1 Billion instead of $4 Billion in this last quarter.

 

[DVCakaCarlF]

Want even more to add to mix? On the 10 Q they have $4.953 billion as positive revenue under operating activities from goodwill and intangible asset impairments.

That is possible...unfortunately, the fair value assigned to good will and intangible assets is loosely governed and subject to “interpretation.”

 

[larryz]

Can you print out where you see that?

I think he's looking at this...

 

[3-D]

Sorry...i meant original, non sequel or remakes.
Frozen they made a sequel...wreck it Ralph they made a sequel...big hero six was spun into a bad cartoon series...

Moana is a good example.

They have done 5 pirate movies and are rebooting

They have done a dozen remakes of animation movies

They have down two adaptations of animated - which were good - but made two sequels of those that were BAD

Mcu is good...but now they’re needing to reinvent it after burning through sequels with the leads

Pixar is 80% sequels. Coco was good...that’s another one.

And I won’t even get into the dumbest reboot in history...can’t go there. A dumpster full of tires on fire.

But none of the movies in the example were a sequel. You can’t lump the original content in with the sequels. Should we disregard Bambi, Lady and the Tramp and Peter Pan because there were sequels based on those properties?

 

[tirian]

Yeah, the fact they highlight content sales to D+ just eeks ooze to me. I know all this is top tier finance magic... but from TWDC level it just seems foul to highlight such stuff. But that's just me as a dumb individual...

The accounting is creative.

 

[ParentsOf4]

Want even more to add to mix? On the 10 Q they have $4.953 billion as positive revenue under operating activities from goodwill and intangible asset impairments.

If you are referring to this:

Disney is saying that they lost money ($1.813B) but that most of the losses were from non-cash items such as depreciation and impairments. If you reverse those out, you end up with "Cash provided by operations - continuing operations": $5.949B.

 

[Sirwalterraleigh]

But none of the movies in the example were a sequel. You can’t lump the original content in with the sequels. Should we disregard Bambi, Lady and the Tramp and Peter Pan because there were sequels based on those properties?

Originals stories...no sequels, remakes or reboots

Slowwwly notice the pattern

There are almost no new ideas or characters in that entire slate. 10 years

 

[GoofGoof]

I think he's looking at this...
View attachment 489057

Embedded in the 4.840B loss in the line at top listed as As reported is a loss of 5.047B from impairment charges. The reason it’s shown as a positive is they are backing it out of the As reported number to get to a number that’s comparable to the prior year. In other words they are backing out the non-recurring loss to show what the impact is of recurring business.

 

[ToTBellHop]

Poor Disney, their business segments only profited $1 Billion instead of $4 Billion in this last quarter.

Christmas 2020 with the Chapeks:

 

[brianstl]

If you are referring to this:

View attachment 489063

Disney is saying that they lost money ($1.813B) but that most of the losses were from non-cash items such as depreciation and impairments. If you reverse those out, you end up with "Cash provided by operations - continuing operations": $5.949B.

I think if I caught it in the earnings report correctly It is that now that it has been a year since the Fox deal went down that charges they had to put on the books for accounting purposes only as part of that deal in previous quarters can be took off their books this quarter for accounting purposes only as revenue. That is where $4.953 of the listed revenue from goodwill and impairments assets came from. There was another around a couple hundred million from other items. So at least that $4.953 billion was never really anything tangible as revenue this time or as cost in previous quarters.

 

[MisterPenguin]

Embedded in the 4.840B loss in the line at top listed as As reported is a loss of 5.047B from impairment charges. The reason it’s shown as a positive is they are backing it out of the As reported number to get to a number that’s comparable to the prior year. In other words they are backing out the no recurring loss to show what the impact is of recurring business.

Also for tax purposes, you want to say to your taxing authorities: "Hey, we lost 4 Billion dollars!!!" While saying to your investors, "Hey, our operating segments profited $1 Billion dollars!!!"

Anyone who itemizes their deductions to lower their taxable income is familiar with this. And when you're asked "How much you make in a year?" You brag about gross income without backing out taxes or deductions.

 

[seabreezept813]

The Mulan thing.. our family sees most Disney movies that go to theaters. We however never pay full price—bargain Tuesdays ($5), aaa tickets (8.50). We have four people but one is a toddler so she won’t get to a theater until life resumes normalcy. Reasons why we wouldn’t pay 30 to see on DisneyPlus: we like the theater it is a way to get out of the house and do an activity, sitting in my living room during covid—bleh do it all the time. Also, tired of remakes—give us some original stuff, there are so many stories yet to be told. Plus no I’ll Make a Man Out of You.
In a covid-less world, would we have paid to see this in theaters for 15-24 bucks, maybe. Especially in February when the weather is crap, it is something to do with my stepdaughter.
So no, I don’t see this being successful, but who knows people are terribly bored lately.

 

[GoofGoof]

I think if I caught it in the earnings report correctly It is that now that it has been a year since the Fox deal went down that charges they had to put on the books for accounting purposes only as part of that deal in previous quarters can be took off their books this quarter for accounting purposes only as revenue. That is where $4.953 of the listed revenue from goodwill and impairments assets came from. There was another around a couple hundred million from other items. So at least that $4.953 billion was never really anything tangible as revenue this time or as cost in previous quarters.

The $4.953 is not revenue it’s an expense, it’s just a non-cash expense so for the statement of cash flows it’s included as part of the loss in net income but then you add it back since it’s non-cash. The impairment is related to goodwill that was put on the books from an acquisition. If they shut down those channels they have to write-off any goodwill or fixed assets associated with them.

Also for tax purposes, you want to say to your taxing authorities: "Hey, we lost 4 Billion dollars!!!" While saying to your investors, "Hey, our operating segments profited $1 Billion dollars!!!"

Anyone who itemizes their deductions to lower their taxable income is familiar with this. And when you're asked "How much you make in a year?" You brag about gross income without backing out taxes or deductions.

Bingo. I work for a company that generates a good deal of cash flows but we won’t be paying cash taxes for a decade due to NOL carry forwards from previous impairments from large acquisitions. Since it’s a non-recurring charge you tell investors not to look at it because it’s meaningless to the business going forward but you definitely don‘t tell the IRS to ignore it