The trouble is the company is continuing to expand outward from the Disney brand... the more it does that the more likely the parks are to be short changed on investments. Frankly the best way forward for the parks would be to spin off the resorts as a stand alone company traded independently on the stock exchange. Then it would be focused on the resorts and not have money it generated frittered away on stupid things like ESPN and the ABC network.
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WDW projections? what do your think will happen? Do you see it getting better? what would you like to see happen?
- Thread starter eliza61nyc
- Start date
winstongator
Well-Known Member
The media segment, which doesn’t include movies and is mostly ESPN, still generates a bulk of DIS overall profit. It’s declining though. Iger has leaned on the parks & movies to grow profits so overall change isn’t too bad. The streaming service is a huge question mark. Netflix is almost as valuable on its own as all of Disney, and Disney is looking to build something similar to that. Imagine all of Disney and fox off Netflix, and on their new service (that’s a long term thing as they have some obligation to Netflix). What does that do to Netflix, and does that make the Disney service competitive? I don’t know what they do with ESPN. Take it full to their service? I get sling now and then for ESPN, and would like a non-cable service where I can get full access to the Disney channel shows via apps.
If they spin anything off, it’s espn not the parks. At least the fox ip fits their other homegrown ip. Espns problem is cord cutting, combined with massive contracts for licenses. I don’t even know who’d want to buy it, let alone what they’d pay for it.
Navigating the launch of the stand alone streaming service is huge, and a big part of why Iger is staying.
Disstevefan1
Well-Known Member
Folks forget how Disney bounced back from 9/11. What you or I want to see does not matter. Disney will thrive into the future always watching the bottom line, making changes as needed to serve their most important customer, the shareholder.
It's scary to think what a mad house DHS will be when Star Wars Land opens!!!
It's scary to think what a mad house DHS will be when Star Wars Land opens!!!
Chef Mickey
Well-Known Member
Well aware, but parks are now a solid second and growing double digits. The media decline is being addressed with the 2019 streaming launch. And guess what? Disney has FAR more/better content than Netflix, which they own. Netflix licenses tons of content...expensive and has very little good original content. Disney will also likely own all of Hulu after spinning off the 39% of SKY they got in the Fox deal in a swap with Comcast.
Netflix valuation is totally insane. Netflix made about $550M in profit in 2017 while Disney made ~17 times that at around $9B. I get it. Netflix is "growing" and has an army of subscribers, but are they really worth the same as DISNEY?? The whole company? Disney has content coming out of their ears, international parks, resorts, movies, TV, merchandising. Netflix has....umm, their subscribers? I mean, LOL.
Literally, name 3 amazing franchises Netflix has developed. Content is expensive and Netflix ONLY has their streaming customers. No movies, no parks, no resorts, no merchandise, nothing. Ask yourself, HOW can Netflix be valued like Disney? Either Netflix is overvalued, Disney is undervalued, or (probably) both.
ESPN is in decline, but likely still makes more money than the entire Netflix company. ESPN has college sports, NBA, NFL, and MLB....all not going anywhere.
Disney owns all the great content, which is the game.
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To Big To Fail? Hmmm. It is possible, not probable, but possible.
Chef Mickey
Well-Known Member
Based on what? I love the doomsdayers that sit there with the "anything is possible" mantra, yet base it on nothing.
No one is too big to fail, but there is no evidence that shows Disney is even remotely headed down that path. People can understand what Disney does. You can see it, touch it, experience it, and everyone has something in their mind about the company.
This isn't a bank with tons of toxic, complex derivatives even the bankers who sell them don't understand. This is a media giant with assets everyone can see and understand, huge profits, a solid balance sheet, and a worldwide presence with the best content in the world.
I was more joking than anything, I don't see Disney going anywhere any time soon. I think the whole country would have to implode before Disney goes anywhere.
winstongator
Well-Known Member
The transition from their media strategy 5 years ago to 5 years from now isn't quite as simple as just rolling out their streaming service. And what to do with Hulu?
Netflix created House of Cards & Stranger Things to start.
DSoF = technology
Amazon had a net loss in fy2014, not that long ago. Now it's got a trillion dollar valuation. They have their own streaming service too, that people see as 'free' - it's included in the cost of Prime. My last binge was there with The Americans.
Parks are approaching media more quickly than I thought. For profit, at the rate parks are growing and media's declining, it could be 2 years before that changes, which would be huge, and potentially presage P&R leadership taking over all DIS.
ESPN owns ZERO valuable content. They license it all and are middle-men just like Netflix, although there's another intermediary between ESPN and most of its customers. You could imagine 10 or 20 years in the future where everyone subscribes to just the content they want - there's an NCAA football app, basketball, NBA, MLB, NFL, etc. ESPN does have some pretty expensive content contracts that limits how fast things will change.
The parks do have a connection with the studio entertainment that the abc/espn part of media networks don't.
winstongator
Well-Known Member
Slightly unrelated, but look to some of the original sponsors of Epcot. GE is a shadow of what it once was, and Kodak has gone through bankruptcy and doesn't do much anymore. There are other examples. Bell Labs is a shadow of its former self. Have you seen the trailer for Captain Marvel? It's not that hard to figure out what happened to those or some others.
danheaton
Well-Known Member
I think that trends ebb and flow with how Disney treats its parks and how guests approach them. We're going to see a bump from Galaxy's Edge and some of the other new attractions like Tron, Guardians, and Ratatouille. The lower attendance and hotel occupancy has to be a concern for Disney right now because they have to report to shareholders every quarter. They'll likely try to stem the tide through cost cutting like we've seen recently and through hotel discounts. We may see some great offers for hotels at least in the next 6-9 months.
A related question for me is the impact of Universal. Yes, Disney will always be the leader. But from everything I've heard from experts, Universal is going to move away from a screens-based approach with some upcoming attractions. The Harry Potter coaster that's upcoming is the first example. In a sense, they're zigging where Disney is zagging. Universal has also built high-capacity rides like Forbidden Journey that used to be a staple for Disney. They will eventually pull Disney back towards that approach in some way, just like Harry Potter pushed Disney to create IP-centered lands.
As a fan of EPCOT Center and original attractions, I'm not very optimistic. With that said, I suspect that the industry will continue to do well. The other big question is an economic downturn, which has to happen sometime. That would have a larger impact than some of the smaller changes that Disney is making and force them to adjust.
A related question for me is the impact of Universal. Yes, Disney will always be the leader. But from everything I've heard from experts, Universal is going to move away from a screens-based approach with some upcoming attractions. The Harry Potter coaster that's upcoming is the first example. In a sense, they're zigging where Disney is zagging. Universal has also built high-capacity rides like Forbidden Journey that used to be a staple for Disney. They will eventually pull Disney back towards that approach in some way, just like Harry Potter pushed Disney to create IP-centered lands.
As a fan of EPCOT Center and original attractions, I'm not very optimistic. With that said, I suspect that the industry will continue to do well. The other big question is an economic downturn, which has to happen sometime. That would have a larger impact than some of the smaller changes that Disney is making and force them to adjust.
winstongator
Well-Known Member
Imagine how ugly a divorce of ESPN from the traditional CATV system would be. Disney would have all ESPN content available on their streaming services (ESPN+, Disney Play, & Hulu). They jack the price up on Comcast & TWC. Comcast balks. Comcast customers go nuts. Comcast buckles. Disney jacks the price again. Comcast balks. Customers go nuts. What carrot does Comcast have to offer Disney to get to a long-term solution to this problem??? Is there a market for fan fiction of potential business negotiations & transactions?
Chef Mickey
Well-Known Member
House of Cards and Stranger things? Are you kidding me? Those wouldn't be in Disney's top 20.
I very high level said they are addressing the subscription service, which will be complex, but I have confidence Disney can execute like they always do.
My point was ESPN is synonymous with sports and is hugely valuable, which is owned by Disney. Sure, it's licensed just like Netflix...but you're making my point. Netflix has an ESPN like deal with all of their content...which is expensive and is why ESPN is struggling. If you say ESPN owns zero content and that's an issue, that's the Netflix problem with rising content costs and it's their only bullet at the moment.
I bet on Disney to lead if the content battle becomes purely a bidding war for because Disney owns its own content and can strike deals with the major 4 sports leagues for the content they don't own with all the cash the company makes.
Larger picture, Disney cannot replicated, but the Netflix model can be. You just need the non proprietary streaming tech and content (which Disney has). You can also license the content by throwing money around, which Disney can do with $9B in profit annually.
You can't throw money at the brand value Disney has developed over 80 years. You can't build parks overnight. You can't get people to love Mickey. The moat Disney has takes time to build.
BTW, I wouldn't bet against Amazon, but their trillion dollar valuation is insane too. At the end of the day, they are a low margin retailer with AWS, which is going to be fiercely challenged by MSFT and IBM.
Chef Mickey
Well-Known Member
The companies you mentioned had awful management and the writing was on the wall for years. Disney has never been more profitable and they are addressing the streaming concerns head on.
GE might be the saddest story in American business and it was killed with AWFUL management.
winstongator
Well-Known Member
GE was lauded while it was doing things that eventually caused it problems. It used its goodwill and credit rating to become a bank
Replicating and unseating tech companies isn’t that easy. If it were, people would be doing it more often. The fox deal puts Disney in a great position vis-a-vis it’s own streaming service. It’s got a critical mass catalog. There aren’t other companies with sufficient content. ESPN’s current content also could support a stand-alone service, but I think there is some contracts about that x it can go into sling because that’s a skinny bundle.
10 years ago, the ads I saw on Facebook were so irrelevant I laughed at them. I didn’t imagine how powerful their data collection and targeting algorithms would become. Netflix has a ton of user viewing information. How valuable is that? I wouldn’t scoff at their content. It might get pushed by them, but my kids really like Netflix content. Who really needs to fear them are abc/nbc/cbs/fox. I don’t like most of their content. HBO started things with Sopranos, band of brothers and other shows 20 years ago. Then You had shows like breaking bad and mad men highlighting what amc could do. The Americans, sons of anarchy, Walking dead and other shows on fx. It’s been a big positive change. Make better content and get more viewers! A lot of content providers were milking their pseudo-monopolies and power over distribution. The fragmentation of that has brought positive change. Disney owns FX now?!?! Those shows are Disney now - is that a feature or bug? So there’s some fragmentation, but also aggregation.
Replicating and unseating tech companies isn’t that easy. If it were, people would be doing it more often. The fox deal puts Disney in a great position vis-a-vis it’s own streaming service. It’s got a critical mass catalog. There aren’t other companies with sufficient content. ESPN’s current content also could support a stand-alone service, but I think there is some contracts about that x it can go into sling because that’s a skinny bundle.
10 years ago, the ads I saw on Facebook were so irrelevant I laughed at them. I didn’t imagine how powerful their data collection and targeting algorithms would become. Netflix has a ton of user viewing information. How valuable is that? I wouldn’t scoff at their content. It might get pushed by them, but my kids really like Netflix content. Who really needs to fear them are abc/nbc/cbs/fox. I don’t like most of their content. HBO started things with Sopranos, band of brothers and other shows 20 years ago. Then You had shows like breaking bad and mad men highlighting what amc could do. The Americans, sons of anarchy, Walking dead and other shows on fx. It’s been a big positive change. Make better content and get more viewers! A lot of content providers were milking their pseudo-monopolies and power over distribution. The fragmentation of that has brought positive change. Disney owns FX now?!?! Those shows are Disney now - is that a feature or bug? So there’s some fragmentation, but also aggregation.
Walt Disney1955
Well-Known Member
Magic Kingdom for us was on Monday October 1st. It was quite busy. The lines for Peter Pan and Mine Train never subsided. The only time it did was during the fireworks. In all honesty, that was the only part of the core of Magic Kingdom that we didn't do. We got on the rest, but it took 13 hours to do. Sometimes you have to hit the long lines at the right time during the day but we never could with those two. Maybe Peter Pan will figure things out a bit better when they are shut down in January for a month. Epcot wasn't bad other than Test Track and Frozen, which we hit earlier in the day. The rest was reasonable. But Magic Kingdom was quite busy. Maybe because it was sandwiched in between two days of it closing at 6pm for the Halloween party.
Who took the jam out of your doughnut?
Lensman
Well-Known Member
This is the Hulu that lost $920 million in 2017, right?
I agree that there is a lot of potential for Disney to turn streaming media into a real moneymaker, but I'd prefer the arguments to be consistent. Hulu's current valuation is $8.7 billion, though some speculate that it "should" or "could" be worth $15B or even $25B. All this while losing close to a billion a year. But all these figures can be ignored if we're looking at blue-sky projections for the purpose of this thread.
In the 2nd quarter of 2018, Netflix earnings were $384M. If we project this flat as an annual figure (which would lowball their potential since they are projecting growth), it would be $1.5B. 2018 earnings are projected to end up at $1.2B while (of course speculative) 2019 earnings are projected at $1.9B. The analysts even more speculatively have 2020 earnings at $2.8B and 2021 earnings at $5B. Anyway, my point here is that you can't compare earnings vs valuation (aka PE multiple) for a company that is growing earnings at 4-5% (DIS) with a company growing earnings at 60-102%.
Note that I actually agree that Netflix valuation is pretty high right now, but my main point is that the potential value of streaming media represents potential for Disney. You say that Disney streaming media has much higher potential than Netflix. If you really believe this and also believe in the potential growth of profitability of the segment, then you could (wrongly) project Disney earnings from streaming media in 2021 at $5B-$10B.
OTOH, I do think that they could turn their $5B operating income in cable networks and $1.2B operating income in broadcast into $5-10B combined streaming and traditional income over the next 5-10 years.
If this comes to pass, such a positive result could be either good or bad for Parks & Resorts. Being flush with cash could result in green light strategic investment. Alternatively it could increase pressure on Parks & Resorts to increase margins which would comparatively become the underperforming unit, and this would obviously be terrible.
Shouldigo12
Well-Known Member
I have to disagree. I love Disney movies, but I don't watch them nearly often enough to justify subscribing to yet another streaming service. When Disney splits from Netflix, I'll be sticking with Netflix.
Chef Mickey
Well-Known Member
Your single use case isn't representative of the broader market.
I also made the point that NFLX is insanely overvalued for the profit they generate.