Disney Earnings Report and More: A Mixed Bag

 by Ray Keating

News/Analysis

DisneyBizJournal.com

August 9, 2023

 

In its third quarter earnings report today, Disney beat expectations on some measures, while missing on others. This came across as the definition of a “mixed bag.”

 

Two points beyond the actual earnings report warrant attention. On the earnings call, Kevin Lansberry, Disney interim CFO, reiterated that a recommendation would be made to the board by the end of this calendar year to reinstate a “modest” dividend. 

Also, Disney announced assorted streaming price increases. Those include commercial-free Disney+ going from $10.99 per month to $13.99; a 20 percent increase in Hulu without ads to $17.99; and the Disney bundle of Disney+ (no ads), Hulu (no ads) and ESPN+ (ads) increasing from $19.99 to $24.99. All three with ads will increase $2 per month to $14.99. These price increases will go into effect on October 12.

 

The Disney stock price immediately reacted positively in after-hours trading to these two announcements.

 

As for adjusted earnings per share for the quarter, Disney came in at $1.03, which beat market expectations of $0.95. However, it was down from $1.09 in the prior year quarter.

 

Regarding revenues, Disney earned $22.33 billion in the third quarter. That actually came up short of market expectations, which ran at about $22.5 billion. However, revenues were up by 4 percent compared to the same quarter last year.

 

Streaming

 

Streaming (or DTC) losses continued in the quarter, but the loss of $512 million was smaller than the market expectation of $759 million.

 

Disney+ subscriptions registered 146 million, which came in lower than the expected 151 million, and down from 157.8 million in the previous quarter. However, Disney+ Core (which excludes Disney+ Hotstar) subscriptions increased from 104.9 million to 105.7 million. ESPN+ and Hulu subscriptions were flat.

 

Streaming profitability continues to be expected by the end of fiscal year 2024. Iger pointed to a recent “reset” of the whole business “for sustained profitability.”

 

For good measure, Iger continued to make clear Disney’s enthusiasm regarding sports, noting once more that ESPN was destined to go fully streaming at some point. He said, “We believe in the power of sports.”

 

Parks

 

Strength in theme parks was noted for the international parks and in Disneyland. “Softer performance” was highlighted for Walt Disney World, though “well above pre-Covid levels,” according to Iger. He also mentioned strong demand for annual passes.

 

In the third quarter, the Parks, Experiences and Products division saw revenues increase 13 percent versus the same quarter last year, and operating income up by 11 percent.

 

Lansberry said the company expected some moderation of attendance at domestic parks in the near term. At the same time, though, Iger was very bullish on the company’s cruise line business.

 

Movies

 

Regarding the film business, Iger pointed to it as a key source of future growth (along with the parks and streaming). He was pleased with the results from Avatar: The Way of Water and Guardians of the Galaxy Vol. 3, but noted that other results were “disappointing,” and that was something “we don’t take lightly.” The Disney CEO emphasized a move to “better economics” on the studio front, including reducing costs per title.

 

Regarding overall cost-cutting efforts, Iger said that Disney was on track to exceed the goal of $5.5 billion in savings.

 

Iger assessed, “While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we now have in place, and because of Disney’s core foundation of creative excellence and popular brands and franchises.”

 

_________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right? 

 

Consider books by Ray Keating…

 

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• Cathedral: An Alliance of Saint Michael Novel. Signed paperbacks and/or paperbacks, hardcovers and the Kindle edition at Amazon. 

 

• The Lutheran Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement, inspiration and consolation from the Christian faith.

 

• Behind Enemy Lines: Conservative Communiques from Left-Wing New York  –  signed books  or at  Amazon.

 

•  Free Trade Rocks! 10 Points on International Trade Everyone Should Know is available at  Amazon  in paperback or for the Kindle edition, and signed books at  www.raykeatingonline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Disney: Earnings, Cost Reductions and the Dividend

 by Ray Keating

News/Analysis

DisneyBizJournal.com

February 8, 2023

 

The Walt Disney Company’s earnings for the quarter ended December 31, 2022, ran ahead of market expectations. Revenues also came in ahead of what was expected.

 

CEO Bob Iger announced a company reorganization under three areas – entertainment, ESPN, and parks, experiences and products. He also emphasized cost reductions, with an announced target of $5.5 billion in savings, which will include cuts in marketing and a 7,000 reduction in the Disney workforce.

For good measure, Iger announced that he is asking the board to reinstate the Disney stock dividend by the end of this calendar year, though at a more “modest” level than where it was prior to the pandemic. Disney CFO Christine McCarthy noted that this dividend would be “a small fraction” of pre-pandemic level, with the intention that it would grow with earnings.

 

Also, Iger announced that an Avatar attraction will be coming to Disneyland, and animated sequels to Toy Story, Frozen and Zootopia are in the works.

 

Compared to the same quarter last year, Disney’s revenues were up by 8 percent, coming in at $23.5 billion.

 

The diluted earnings per share (EPS) came in at $0.70, versus $0.63 in the same quarter last year, while diluted EPS excluding certain items registered $0.99 versus $1.11 last year.

 

Disney+ subscribers declined from 164.3 million in the previous quarter to 161.8 million in the latest. The losses came in India and Southeast Asia, as Disney lost the streaming rights to India Premier League cricket.  ESPN+ subscribers increased from 24.3 million to 24.9 million, and Hulu subs rise from 47.2 million to 48.0 million.

 

However, streaming losses narrowed for the company, and Iger emphasized cost reviews across streaming.

 

Disney CEO Bob Iger was quoted in the earnings statement: “After a solid first quarter, we are embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises. We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders.” 

 

Iger emphasized a return of authority to creative areas, which will include distribution and financial decisions.

 

As for the Disney parks, it was reported: “Disney Parks, Experiences and Products revenues for the quarter increased 21% to $8.7 billion and segment operating income increased 25% to $3.1 billion. Higher operating results for the quarter reflected increases at our domestic parks and experiences and, to a lesser extent, our international parks and resorts. Operating income growth at our domestic parks and experiences was due to higher volumes and increased guest spending, partially offset by cost inflation, higher operations support costs and increased costs for new guest offerings.” Iger called parks performance “outstanding.”

 

At the time of this writing, approximately an hour after the markets closed on Wednesday, Disney stock was up by better than six percent in after-hours trading.

 

__________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right? 

 

Consider books by Ray Keating…

 

• The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks at RayKeatingOnline.com or paperbacks, hardcovers and Kindle editions at Amazon.com.

 

• Cathedral: An Alliance of Saint Michael Novel. Signed paperbacks and/or paperbacks, hardcovers and the Kindle edition at Amazon. 

 

• The Pastor Stephen Grant thrillers and mysteries. The latest in the series is Persecution: A Pastor Stephen Grant Novel. Get the signed books here, or paperbacks and Kindle editions right here.

 

• The Lutheran Planner: The TO DO List Solution combines a simple, powerful system for getting things done with encouragement, inspiration and consolation from the Christian faith.

 

• Behind Enemy Lines: Conservative Communiques from Left-Wing New York  –  signed books  or at  Amazon.

 

•  Free Trade Rocks! 10 Points on International Trade Everyone Should Know is available at  Amazon  in paperback or for the Kindle edition, and signed books at  www.raykeatingonline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Disney Earnings and Disney+ Subscribers Up

 by Ray Keating

News/Analysis

DisneyBizJournal.com

May 11, 2022

 

The Walt Disney Company reported earnings and Disney+ subscriptions for the second quarter after the market closed on May 11, 2022. The news was positive on both streaming and domestic parks.

On the streaming front, net subscriber additions on Disney+ beat market expectations. While the market generally expected five million new net subscribers, the company added 7.9 million Disney+ subscribers. That brought the total to 137.7 million. Disney’s goal is to hit 230 million to 260 million subscribers in 2024.

 

ESPN+ subscribers came in at 22.3 million, which was up by 1 million compared to last year, and Hulu added 300,000 to come in at 45.6 million subscribers. 

 

That put total streaming subscribers for the company at 205.6 million.

 

Meanwhile, revenue came in at $19.2 billion in the second quarter, which was up by 23 percent over the previous year. Income registered $3.7 billion, up by 50 percent versus last year. And earnings per share (EPS) at $1.08 rose by 37 percent. EPS did come in below what the market expected, but that was due, at least in part, to changes in tax regulations.

 

On the call, the company noted that it was dealing with ongoing supply chain issues and labor market tightness, as is the case across other industries.

 

As for theme parks, the Disney Parks, Experiences and Products segment saw revenue growth of 110 percent, and operating income coming at $1.76 billion versus a loss of $406 million last year.

 

Disney explained: “Operating income growth at our domestic parks and experiences was due to higher volumes and increased guest spending, partially offset by higher costs. Higher volumes were due to increases in attendance, occupied room nights and cruise ship sailings. Cruise ships operated at reduced capacities in the current quarter while sailings were suspended in the prior-year quarter. Guest spending growth was due to an increase in average per capita ticket revenue, higher average daily hotel room rates and an increase in food, beverage and merchandise spending. The increase in average per capita ticket revenue was due to a favorable attendance mix and the introduction of Genie+ and Lightning Lane in the first quarter of the current fiscal year. Higher costs were primarily due to volume growth, cost inflation and higher marketing spending. Our domestic parks and resorts were open for the entire current quarter, whereas Disneyland Resort was closed for all of the prior-year quarter, and Walt Disney World Resort operated at reduced capacity in the prior-year quarter due to COVID-19 restrictions.”

 

The company said that it was still controlling domestic parks attendance in order to improve guest experience.

 

The stellar box office performance of Dr. Strange in the Multiverse of Madness was highlighted as well, which has now passed $500 million globally.

 

Disney CEO Bob Chapek also emphasized the importance and profitability of live sports going forward, and vaguely pointed to a major ramping up or shifting of ESPN content to streaming.

 

After the market closed, at the time of this writing, Disney shares were off by better than two percent. Shares recently were trading at or near 52-week lows.

 

__________

 

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

 

Two great ways to pre-order Cathedral: An Alliance of Saint Michael Novel, which is Ray’s sixteenth work of fiction, and the first in the Alliance of Saint Michael series. Signed paperbacks here and the Kindle edition here. 

 

Two great ways to order Ray Keating’s new nonfiction book – The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks here, and paperbacks, hardcovers and Kindle editions here.  

 

Get all of Ray Keating Pastor Stephen Grant thrillers and mysteries in paperback and for the Kindle at Amazon.com and signed books at www.RayKeatingOnline.com. 

 

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