TWDC Q2 Earnings & Conference Call

[fillerup]

Tuesday, May 6 - Earnings at approximately 4:15 followed by Iger & Rasulo on the conference call at 5pm.

Does anyone expect these guys to face more aggressive questioning about the financial impact of MM+?

Specifically, will they hear questions re' Rasulo's statement on 11/7/13 concerning expenses for "new initiatives in Florida -- and that's not only MyMagic+.........And this year, we're looking at about a $300 million expense item, and more or less the same amount on the revenue side"?

The phrase "new initiatives in Florida" is sufficiently vague that TWDC could include such things as 7DMT and the new hard ticket events in these calculations - but will the analysts ask if the company is on target to produce this $300M in new revenue.

 

[Magenta Panther]

Wish SOMEBODY would ask Iger about the damn yeti...

 

[fillerup]

I forgot to add, you can listen to the call here:

Iger & Rasulo

 

[PhotoDave219]

Thanks! And i look forward to it.

 

[MichWolv]

Wish SOMEBODY would ask Iger about the damn yeti...

Somebody might. But asking Iger about the Yeti in such a setting is the equivalent of asking the CEO of Ford why the F-150 doesn't come in green when Ford said it would.

 

[Mouse Trap]

Tuesday, May 6 - Earnings at approximately 4:15 followed by Iger & Rasulo on the conference call at 5pm.

Does anyone expect these guys to face more aggressive questioning about the financial impact of MM+?

Specifically, will they hear questions re' Rasulo's statement on 11/7/13 concerning expenses for "new initiatives in Florida -- and that's not only MyMagic+.........And this year, we're looking at about a $300 million expense item, and more or less the same amount on the revenue side"?

The phrase "new initiatives in Florida" is sufficiently vague that TWDC could include such things as 7DMT and the new hard ticket events in these calculations - but will the analysts ask if the company is on target to produce this $300M in new revenue.

I'd be surprised if anyone asks about expenses related to MM+. No one has made it an outstanding topic the passed few earnings call (as far as I can remember), so I see no reason why they would now. About all expenses related to MM+ should be factored in by now and seems to have made little impact to any of the financials.

We'll see more of the usual, questioning on films, ESPN/ABC and spending in parks. A lot of signs point to a blowout on earnings this quarter. Good time to own Disney, especially if it sells off a bit like it usually does even after decent earnings.

 

[asianway]

I'd be surprised if anyone asks about expenses related to MM+. No one has made it an outstanding topic the passed few earnings call (as far as I can remember), so I see no reason why they would now. About all expenses related to MM+ should be factored in by now and seems to have made little impact to any of the financials.

We'll see more of the usual, questioning on films, ESPN/ABC and spending in parks. A lot of signs point to a blowout on earnings this quarter. Good time to own Disney, especially if it sells off a bit like it usually does even after decent earnings.

Mm+ costs are questioned each call and are artfully dodged. Analysts aren't stupid. @ParentsOf4 posted the transcripts of the past few mm+ questions in another thread

 

[Mouse Trap]

Mm+ costs are questioned each call and are artfully dodged. Analysts aren't stupid. @ParentsOf4 posted the transcripts of the past few mm+ questions in another thread

I just think we make a bigger deal of the MM+ expenses than it really is. A lot of money spent? Yes. Huge impact on revenues, cash flow, etc... No. Disney would not be seeing the gains it has the passed year, if it was as terrible as some people make it out to be. If it was an issue the analysts would force the issue more, as you said they aren't stupid.

 

[the.dreamfinder]

Mm+ costs are questioned each call and are artfully dodged. Analysts aren't stupid. @ParentsOf4 posted the transcripts of the past few mm+ questions in another thread

It also seems that of TWDC's most important assets, ESPN and the parks, ESPN is of greater concern which is funny because P&R are in arguably worse shape.

http://www.deadline.com/2014/04/esp...-concerns-about-cord-cutting-and-competition/
UPDATED: Following CEO Bob Iger’s lead, Disney CFO Jay Rasulo won’t break out financial numbers for ESPN. But he strongly hints that its financial prospects are rosy by offering a few projections for Disney’s cable networks, which are dominated by ESPN. He tells investors to expect high single digit annual growth in revenues from pay TV distributors through 2016, and a similar growth rate for operating income. He’s confident about these projections because Disney has programming deals with eight of the 10 largest pay TV distributors, with the remaining two due by year end. In addition, most of its contracts with sports leagues last for years. The company won’t project ad sales but says ESPN has strong pricing power.

PREVIOUS, 11:06 AM: Disney’s dumping a lot of data about ESPN this afternoon to ease Wall Street fears that the company’s cash cow could face leaner times due its rising costs and new competition from channels led by Fox Sports 1. CEO Bob Iger kicked off today’s investor meeting in Bristol, Conn vowing that he’s “going to continue to invest” in ESPN which he sees as core to his strategy to build brands and franchises. Disney doesn’t break out financial numbers for the channel, but he noted that the company’s pay TV networks account for 32% of its revenues — and 56% of its operating income. President John Skipper and other ESPN execs say that the channel can continue to score: Few pay TV customers have cut the video cord, and those who opt out typically do so for financial reasons — not because they reject the programming. Execs add that ESPN has become a household name like Apple, Google, CocaCola, and Disney. Some 88% of Americans know ESPN, putting it ahead of the Olympics (83%) and Nike (81%). Even with new competition, the portfolio of channels including ESPN2 and ESPNews continues to grow. They say that ESPN is impervious to DVR ad skipping because 71% of its telecast hours are live and 96% of its viewing is live. That’s a contrast with the four major broadcast networks where 58% of their prime time programming is watched live. Execs also talked up ESPN’s reach on other media. Its Project Blueprint — which measures audiences on TV, radio, PCs, smartphone, and tablets — found that ESPN has an unduplicated reach of 191M adults, or 79% of the total, including 101M men or 86%. And on an average day ESPN Media reache 64M adults, including 36M men 18+. “It’s exploded the misconception that more platforms would cannibalize television,” says Artie Bulgrin, SVP Global Research and Analytics.

 

[the.dreamfinder]

I just think we make a bigger deal of the MM+ expenses than it really is. A lot of money spent? Yes. Huge impact on revenues, cash flow, etc... No. Disney would not be seeing the gains it has the passed year, if it was as terrible as some people make it out to be. If it was an issue the analysts would force the issue more, as you said they aren't stupid.

Analysts aren't perfect. Once Harry Potter phase two opens, expect more scrutiny of it.

 

[Magenta Panther]

Somebody might. But asking Iger about the Yeti in such a setting is the equivalent of asking the CEO of Ford why the F-150 doesn't come in green when Ford said it would.

You're probably right, but I'd love to hear how Iger would respond to such a question. He needs to be put on the spot about it. The ride's a disgrace to the legacy of quality the Walt Disney Company used to have.

 

[MichWolv]

You're probably right, but I'd love to hear how Iger would respond to such a question. He needs to be put on the spot about it. The ride's a disgrace to the legacy of quality the Walt Disney Company used to have.

"The Walt Disney Company takes great pride in offering unique experiences in all of our theme parks. We have a legion of devoted fans who expect a high level of quality and service from all of our attractions, and we are thankful that those fans seek to hold us to those expectations. As always, the safety and enjoyment of our guests will remain paramount in all decisions we make regarding the parks."

 

[MichWolv]

It also seems that of TWDC's most important assets, ESPN and the parks, ESPN is of greater concern which is funny because P&R are in arguably worse shape.

The analysts are more concerned with ESPN.

If there is a problem in P&R's profitability:
1) the drop-off will come slowly - it's a slide, not a cliff, and
2) the way to reverse it is known -- expensive but known.

However, if cord cutting impacts ESPN's revenue from cable subscribers:
1) It could happen very quickly, and will hit the bottom line immediately with no reduction in costs to offset
2) There isn't an obvious, known way to reverse it or compensate for it.

 

[the.dreamfinder]

The analysts are more concerned with ESPN.

If there is a problem in P&R's profitability:
1) the drop-off will come slowly - it's a slide, not a cliff, and
2) the way to reverse it is known -- expensive but known.

However, if cord cutting impacts ESPN's revenue from cable subscribers:
1) It could happen very quickly, and will hit the bottom line immediately with no reduction in costs to offset
2) There isn't an obvious, known way to reverse it or compensate for it.

It's much easier to boil a frog by gradually turning up the heat than by putting him in boiling water.

 

[jlsHouston]

I don't think there will be any surprises, Wall Street will react favorably and.....next quarter should show increased P&R revenue with all these added value(cost) events you can book for a price now, so I don't think they are even worried about the increased costs for MM+
Anyways that is my prediction

 

[MichWolv]

It's much easier to boil a frog by gradually turning up the heat than by putting him in boiling water.

Pithy, but inapt. Analysts and even Bob Iger are smarter than frogs. And you're missing the second point of my notes. The way to fix a P&R problem is known, but if the ESPN problem comes up, there is no known solution. The market doesn't like expensive fixes, but it really doesn't like not having a fix.

 

[fillerup]

I'm expecting to hear good financial results this afternoon, but I think the drivers of that will be higher prices and attendance - not MM+. I may not have a good enough imagination to see how Next Gen drives significant revenues all on its own.

The MM+ expenses are just now kicking in as far as depreciation goes and those expenses will be taken at a much more rapid rate than is typical for TWDC. Rasulo has said as much.

Also, I'm guessing that the operating expenses for this initiative would stagger most people if we had a way of getting at them.

I'm hoping some pointed questions get asked.

 

[ABQ]

Mickey did bring in the dough. Nice beat over consensus estimates. Now to see how they spin info away from the cost of NextGen on the earnings call. Probably just focus on Frozen the entire call. Though it will be interesting to see if the make over of the Magic (the cruise ship) which is now apparently Magic Band enabled, is mentioned.

 

[Mouse Trap]

Costs of MM+ are not effecting the company in any way. We were just proven that 4 minutes ago when earnings blew the expectations away. Iger can spin it any way he wants, he's brining in the wealth. Not much of a convo there.

 

[PhotoDave219]

Costs of MM+ are not effecting the company in any way. We were just proven that 4 minutes ago when earnings blew the expectations away. Iger can spin it any way he wants, he's brining in the wealth. Not much of a convo there.

No, Jason Garcia just tweeted that it's weighing down profits…