DIS Shareholders and Stock Info ONLY

[wabbott]

https://www.wsj.com/articles/disney-dis-q2-earnings-report-2023-fcacec47

Disney to Make Hulu Content Available Within Disney+ Platform
Entertainment giant posts narrower streaming loss for the quarter amid price increases
By Robbie Whelan
Updated May 10, 2023 8:06 pm EDT

Walt Disney Co. said it would make Hulu content available within Disney+ in the U.S. by the end of the year, the latest effort by newly returned Chief Executive Robert Iger to get the company’s streaming business to profitability.

“We will soon begin offering a one-app experience domestically that incorporates our Hulu content via Disney+,” Mr. Iger said during a call with investors to discuss the company’s latest quarterly results.

Mr. Iger said the company’s major streaming platforms—which beyond Disney+ and Hulu also include ESPN+—would remain available as stand-alone options, but said the upcoming one-app offering would provide greater opportunities for advertisers and make navigating Disney’s various content libraries easier for consumers.

“We also think that it will benefit consumption in general, lower churn, be more attractive,” Mr. Iger said. “It’s just an all-in-one. It’s a bigger platform.”

The move comes as Disney announced it had dramatically reduced its streaming business’s losses in the latest quarter—largely the result of price increases for Disney+—but also reported that Disney+ suffered its first-ever domestic subscriber loss.

Disney shares were 4.4% lower in after-hours trading.

Mr. Iger also confirmed that Disney has held negotiations with rival Comcast—which owns one-third of Hulu—that he described as “cordial,” over the future of the streaming service.

Earlier this year, Mr. Iger said that as far as Hulu is concerned, “everything is on the table.” On Wednesday, Mr. Iger softened that statement, saying that with the benefit of an additional three months to review the streaming business, he had decided that Disney+ should have a general entertainment offering for the long term.

“Where we are headed is for one experience that would have general entertainment and Disney+ content together,” Mr. Iger said. “How that ultimately unfolds is to some extent in the hands of Comcast.”
Comcast had no comment.

Mr. Iger began Wednesday’s call with an unusual introductory statement: He congratulated Disney rival Universal Pictures, a division of Comcast, for the box office success of “The Super Mario Bros. Movie,” which recently surpassed $1.16 billion in total ticket sales, making it the fifth-highest grossing animated film of all time.

Hulu’s unusual joint ownership arrangement is the result of Disney’s 2019 acquisition of 21st Century Fox’s major entertainment assets, a deal that boosted Disney’s stake in Hulu from one-third to two-thirds. Under an agreement reached that same year, both Disney and Comcast have the right to force a sale of Comcast’s stake at fair-market value, starting in 2024, with a floor valuation of $27.5 billion for the whole service.

Disney on Wednesday said its direct-to-consumer segment, which includes streaming, lost $659 million in the quarter ending April 1, far less than the $845 million loss that analysts polled by FactSet had anticipated.

Price increases to Disney+ and Disney’s other streaming bundles implemented in December, along with a new ad-supported tier for the service, are starting to show up in the company’s financial results. Average monthly revenue per user, or ARPU—a key metric in streaming—for Disney+ rose to $7.14 in the U.S. and Canada from $5.95 in the previous quarter.

The global subscriber base for Disney+ fell by 4 million from the previous quarter to 157.8 million, mainly the result of cancellations in India, where Disney last year lost the rights to stream a popular cricket league that had been a major driver of new sign-ups.

The company also said Disney+ lost 300,000 subscribers in the U.S. and Canada, a number that Mr. Iger described as insignificant—and as a sign that Disney has room to raise prices further.

In Wednesday’s call, Mr. Iger said that he intends to raise prices further for the ad-free, stand-alone version of Disney+ in an effort to drive more subscribers to the lower-priced ad-supported tier, which he said is producing strong revenue from advertising sales.

Hotstar, the Indian version of Disney+, saw its subscriber count fall to 52.9 million from 57.5 million. However, that decline is likely to improve the streaming service’s overall financial health, because subscribers in India only produce 59 cents a month in average revenue, by far Disney’s weakest market for streaming sales.

Income from Disney’s traditional television networks, including ESPN, which send cash to the company’s coffers in the form of carriage fees and advertising revenue, fell significantly to $1.8 billion, from $2.8 billion in the year-earlier quarter. The decline was in line with analyst expectations.

Before he came back as CEO, Mr. Iger said in September that traditional TV “is marching to a distinct precipice, and it’s going to be pushed off,” as millions of cable subscribers cut the cord each year.

Sales and income increased at Disney’s Parks, Experiences and Products division, to $7.8 billion and $2.2 billion respectively. The second quarter was the first quarter in recent memory without major Covid-19 related disruptions to any of its theme parks, including Disneyland Shanghai, which has been plagued by closures over the last several years.

Mr. Iger also addressed the continuing battle between Disney and Florida Gov. Ron DeSantis, which has moved to the courts in recent weeks, saying that Mr. DeSantis’s attacks on the company are “plainly a matter of retaliation” and threaten Disney’s ability to invest further in Florida.

“Does the state want us to invest more, employ more people, and pay more taxes, or not?” Mr. Iger asked, after noting that there are thousands of special tax districts in Florida that were established by private companies and resemble the one that includes Walt Disney World that haven’t attracted the governor’s criticism.

A spokesman for Mr. DeSantis didn’t respond to requests for comment.

Overall, Disney’s revenue grew 13% from a year earlier to $21.8 billion. Net profit nearly tripled to $1.27 billion from $470 million a year earlier.

​

https://www.wsj.com/articles/how-donald-trump-and-cnn-found-each-other-again-66c9c85c

 

[wabbott]

https://variety.com/2023/biz/news/disney-hulu-content-bob-iger-1235609313/

May 10, 2023 6:33pm PDT
Time to Grow Up, Disney+ and Hulu: Content Cuts Coming as Part of Streaming’s ‘Maturation Process’
By Cynthia Littleton

Disney is going on a diet — but Hulu is still on the menu.

Disney CEO Bob Iger and chief financial officer Christine McCarthy delivered a clear message on Wednesday to Wall Street and Hollywood during Disney’s quarterly earnings call. Disney will cut the overall volume of content produced for its streaming platforms — primarily Disney+ and Hulu — as it deals with a much tighter macroeconomic environment, not to mention the uncertain impact of the writers strike that began May 2.

After spending just under $30 billion on content in Disney’s 2022 fiscal year (which ends in September), Iger has targeted $3 billion in savings for 2023. Of that $30 billion, about 30% is devoted to sports rights for ESPN and ABC Sports.

“We are in the process of reviewing the content on our (direct-to-consumer) services to align with the strategic changes in our approach to content curation,” McCarthy said. “Going forward, we intend to produce lower volumes of content in alignment with this strategic shift.”

Disney will trim the volume of new content that it produces for 2024 and 2025. It will also weed through the vast library of content on on the Disney+ and Hulu platforms, removing some of the little-watched titles that are too costly to maintain as available titles due to residuals, royalties, music licensing fees and other costs. Warner Bros. Discovery went through a similar house-cleaning last summer, which marked the first time one of Hollywood’s majors faced the harsh fact of inventory management in the streaming age.

“This is part of the maturation process as we grow into a business that we had never been in,” Iger said.

On Wednesday, Iger also unveiled plans to offer a new option for bundling Disney and Hulu into a single app. He billed it as an effort to attract new subscribers and increase engagement for both platforms, particularly Hulu. But keen-eyed Disney observers could not ignore the subtext. Disney taking steps to further integrate Disney+ and Hulu seems like a big hint that Disney aims to buyout Comcast’s remaining one-third stake in Hulu early next year.

“It’s critical we rationalize the volume of content we’re creating and what we’re spending to produce our content,” Iger told investors. “Our legacy platforms enable us to expand our audiences and often augment our potential streaming success while at the same time allowing us to amortize our content costs across multiple windows.”

Disney will take a write-down of $1.5 billion to $1.8 billion later this year to acknowledge the loss of value in content that had been developed amid the rush to load up Disney+ and Hulu with buzzy shows that would draw new subscribers.

Iger also indicated that Disney will tap the brakes on local-language content in certain areas where the return simply can’t match the investment.

“We also need to strike the right balance between our local and global programming, as well as our platform and program marketing,” he said. “We must continue calibrating our investments in specific markets, looking at the total addressable market and ARPU prospects and evaluating the profitability potential… We’re doing the essential work now to position our streaming business for sustained growth and success in the future.”
During Disney’s last earnings call in February, Iger told analysts that all manner of scenarios were under consideration to help steer the company back to delivering strong profits from the media side of the Mouse House. (Once again, the parks, experiences and products division was the star of Disney’s earnings report.) Those comments, plus his observations about the uphill climb for “general entertainment” in a crowded TV landscape, made many wonder whether Disney was preparing to part ways with Hulu.

But the tighter bundling plan and talk of applying more “curation” to the content vault were strong signals that Hulu will remain part of the pixie dust at the Magic Kingdom. Disney amassed a roughly two-thirds stake in Hulu after its 2019 acquisition of 21st Century Fox.

Comcast and Disney struck a deal in May 2019 that set a timetable for Comcast selling its remaining interest in Hulu to Disney (or vice versa) as early as January 2024, at a price tag that values Hulu in its entirety at a minimum of $27.5 billion. At this point, the real question around the fate of Hulu is how hard will Disney and Comcast brawl over the valuation of that one-third stake.

“It’s clear that a combination of the content that is on Disney+ with general entertainment is a very strong combination from a subscriber perspective — from a subscriber acquisition and subscriber retention perspective, and also from an advertiser perspective,” Iger said. “So where we are headed is for one experience that would have general entertainment and Disney+ content together. How that ultimately unfolds is in the hands of Comcast and in the hands of a conversation or a negotiation that we have with them. I don’t want to be in any way predictive in terms of when or how that ends up.”

 

[wabbott]

Here's the NY Times' James Stewart from yesterday PM.

 

[wabbott]

Wall Street still ain't impressed this morning.

https://finance.yahoo.com/quote/DIS?p=DIS

96.08 -5.06 (-5.00%)
Pre-Market: 04:14AM EDT

 

[wabbott]

https://finance.yahoo.com/news/para...-buffetts-advice-morning-brief-130005827.html

Paramount didn't follow Warren Buffett's advice: Morning Brief
Brian Sozzi · Executive Editor
Wed, May 10, 2023 at 9:00 AM EDT

A few days removed from Warren Buffett's annual party in Omaha, I am left thinking of this quote from one of the CEOs atop the billionaire investor's long-time holdings.

"His advice to me was to be transparent. He may not like what you are going to tell him, but as long as you are not surprising him you will be OK," American Express Stephen Squeri told Yahoo! Finance.

Execs at media giant Paramount — where Buffett is a 15.3% holder after building an initial stake in Nov. 2022 — must not have gotten that sage advice from the OG investor.

And that calls into question what the Oracle will do next with his ownership stake.

Last week, Paramount — which has made major progress on the streaming subscriber front with Paramount+ — surprised the heck out of investors like Buffett.

Paramount posted a first quarter direct to consumer business loss of $511 million. A year ago, Paramount's direct to consumer business lost $456 million.

That's a lot of losses for a business like Paramount+, which had 60 million subscribers exiting the first quarter. But it underscores how costly it is to produce content such as the hit Paramount show Yellowstone while also staying sharp on pricing to compete with fellow streamers Netflix, Disney, Amazon, etc.

It's just a brutal business to be in.

The fact ad revenue in Paramount's traditional TV business is under pressure in part to macroeconomic conditions only amplifies the losses at the streaming business.

"Paramount is still moving through a difficult combination of heavy investments to try to offset structural decline in a weak cyclical top-line environment," said Macquarie Research analyst Tim Nollen in a client note.

Nollen maintained an under-perform rating on Paramount's stock.

The company then surprised investors again — such as Buffett — by slashing its quarterly dividend to $0.05 from $0.24.

Buffett loves dividends. He loves collecting the big fat checks from a Coca-Cola and aforementioned AmEx.

Now he stands to collect smaller quarterly checks from Paramount, provided he still owns the stock.

Buffett is likely to release a 13f filing early next week disclosing movements in his vast stock portfolio. If Paramount isn't in there — or the stake has been reduced — Paramount investors could feel more pain.

Buffett didn't exactly voice support for the company at the Berkshire Hathaway annual meeting.

“It’s not good news when any company cuts its dividend dramatically," Buffett told a packed CHI Health Center.

No it's not, Warren.

 

[wabbott]

https://vnexplorer.net/heres-what-a...wing-the-poor-streaming-numbers-s2139253.html

Here's what all the major media analysts are saying about Disney following the poor streaming numbers

05/11/2023

After its latest quarterly report, Wall Street analysts are weighing if Disney 's cost-cutting measures and strength in its experiential businesses can outweigh challenges within the media giant's streaming service.

On Wednesday, the major media conglomerate reported 93 cents in adjusted earnings per share for its second fiscal quarter, exactly in line with the consensus estimate of analysts polled by Refinitiv.

Disney slightly beat on quarterly revenue, posting $21.82 billion against a $21.78 billion forecast.

But investors focused on the total number of subscriptions to streaming platform Disney+, which sat at 157.8 million while analysts expected 163.17 million, according to StreetAccount. Notably, the company said it would add Hulu content to Disney+ and said it would raise the price of the ad-free option later this year.

Analysts said Disney performed well in its cruise and parks business, while implementing cost-saving measures. But they said those plusses need to be weighed against the weakness seen in media and streaming as the company tries to make Disney+ more viable and position itself in a weakening advertising market.

“Disney is in the early stages of restructuring its Media businesses, taking significant cost out and revisiting its content monetization strategy,” wrote Morgan Stanley analyst Benjamin Swinburne. “Fortunately, it is buttressed by continued Parks strength which along with valuable brands and franchises can bridge it to this uncertain future.”

Shares were down more than 5% before the bell Thursday. The stock has gained 16.4% so far this year.

Swinburne said he is keeping his overweight rating and expectations for a 20% compound annual growth rate in adjusted earnings per share through its 2026 fiscal year, helped by strength in parks and potential in the media business. He noted management's commitment to maximizing revenue in the latter “in an admittedly difficult environment,” an apparent nod to the cooling advertising landscape.

Despite the missed subscriber estimate, some analysts pointed out the narrowing of losses on the direct-to-consumer business.

Citi analyst Jason Bazinet credited that to price hikes for the streaming service in December.

“Given the segment operating income beat and narrowing of DTC losses, we would not be surprised if shares traded modestly higher tomorrow,” Bazinet said in a note to clients Wednesday.

Meanwhile, Evercore ISI analyst Vijay Jayant noted that the second-quarter operating income beat was primarily due to the timing of the Disney+ and Hulu release slate moving. Because of that, the firm's full-year estimate hasn't changed.

Still, some analysts don't necessarily expect smooth sailing ahead.

Bank of America analyst Jessica Reif Ehrlich said the price hikes could drive long-term profit at the same time as experiential businesses like cruises and parks perform well. But she said those wins are “counterbalanced” by headwinds in linear networks, the fact that Disney+ subscriber growth should remain “muted” in the current quarter and the potential for a deceleration in domestic parks in the second half of the year coming off the 50th anniversary celebration for Walt Disney World.

Reif Ehrlich kept her buy rating and $135 target price for shares, while lowering her estimate for full-fiscal year earnings per share.

For Goldman Sachs analyst Brett Feldman, the net impact of the “cross currents” is consolidated estimates for most periods, as the path to streaming profitability and success of cost-saving measures was “slightly” offset by the challenges for maintaining park margins and pressures on the linear TV business in the changing advertising landscape.

Feldman kept his buy rating on the stock, but lowered his price target by $6 to $130. The new target still implies an upside of 28.5% over Wednesday's close.

And KeyBanc analyst Brandon Nispel disagreed with Citi's Bazinet, saying the stock could keep sliding given both the missed Disney+ number and the cautious outlook for domestic parks in the second half of the year. While keeping his overweight rating on the stock, Nispel cut $10 from his price target to bring it to $120. That new target still reflects an 18.6% upside.

“DIS moving pieces make DIS messy,” he said. But, he said “we continue to like DIS” because it's still in the early innings for direct-to-consumer monetization, the cost-saving initiatives are setting the company up well for 2024 and a “recession” in parks may already be priced in. — CNBC's Michael Bloom contributed to this report.


https://www.cnbc.com/2023/05/11/ana...osscurrents-after-latest-earnings-report.html

 

[Jrb1979]

You said Q3 2023 looks soft. These things are not happening till 2024. Again, nothing in the call points toward soft bookings. Stop moving the goal posts.

Plus, I am not sure any of the 2024 changes are things that will drive more people to book. It just gives people the ability pre-pay Disney for meals and line skipping. Feels like a bigger win for Disney.

https://twitter.com/x/status/1656392350246256640

The comment on the call was WDW was down and offset by Disneyland. It’s expected WDW may be soft the rest of the year. We’ve already seen plenty of discounts we haven’t seen in the past couple years. I do think it’s a mix of things contributing but I also don’t think Tron itself is getting people to book trips.

 

[RivShore]

https://twitter.com/x/status/1656392350246256640

The comment on the call was WDW was down and offset by Disneyland. It’s expected WDW may be soft the rest of the year. We’ve already seen plenty of discounts we haven’t seen in the past couple years. I do think it’s a mix of things contributing but I also don’t think Tron itself is getting people to book trips.

WDW Profit was down due to higher costs NOT lower guest counts. Can you see the bolded below? How can you possibly twist that into Q2 softness?????

"Higher costs, driven by cost inflation, increased expenses associated with new guest offerings, and higher depreciation, were the primary cause of the decline at Walt Disney World Resort. However, increased volumes, driven by attendance growth and higher occupied room nights, partially offset the decline."

 

[wabbott]

Reckon why depreciation increased? Isn't that supposed to be a relatively constant figure year to year?

 

[RivShore]

Reckon why depreciation increased? Isn't that supposed to be a relatively constant figure year to year?

Not sure but my first thought was that it could be from all the recent investments (rides, restaurants, EPCOT redo, etc.) that have become operational are now being depreciated.

 

[RamblingMad]

What is going on at Disney? It’s my worse performing asset. I didn’t expect to see the stock down another 8% today.

 

[RamblingMad]

https://twitter.com/x/status/1656392350246256640

The comment on the call was WDW was down and offset by Disneyland. It’s expected WDW may be soft the rest of the year. We’ve already seen plenty of discounts we haven’t seen in the past couple years. I do think it’s a mix of things contributing but I also don’t think Tron itself is getting people to book trips.

Makes sense. The ride is a little over a minute long. Most reviews of it have been meh. Guardians got much better.

Has WDW hit the tipping point for raising prices?

 

[RivShore]

What is going on at Disney? It’s my worse performing asset. I didn’t expect to see the stock down another 8% today.

The slow death of high margin cable
The move to very low margin streaming
The slowing economy which will eventually slow travel
Increased cost from inflation
etc. etc.

For comparison see WBD, PARA, NFLX, all have similar trajectories the last few years. From a Wall St perspective, Disney is now valued almost exclusively on streaming, it was for better at the start and now is for the worse.

Then look at Sony, only down 20% from it's all time high - they stayed with the old model of selling content to the highest bidder and stayed out of the streaming wars.

ETA - there's also the major question of who the CEO will be in 18 months, when Iger leaves (for good?). This company does not have a great track record with succession.

 

[RamblingMad]

The slow death of high margin cable
The move to very low margin streaming
The slowing economy which will eventually slow travel
Increased cost from inflation
etc. etc.

For comparison see WBD, PARA, NFLX, all have similar trajectories the last few years.

Then look at Sony, only down 20% from it's all time high - they stayed with the old model of selling content to the highest bidder and stayed out of the streaming wars.

The only thing saving cable is news and sports. But a lot of that has now moved to streaming. It’s going to be around until the older generation that uses it dies off. Definitely a slow death.

Streaming grew way too fast with lockdowns. Without a lot of new content, there is no reason to keep subs after binge watching content. I’m working my way through P+ content now.

And theme parks and cruising can only raise prices so high. Inflation is eating into people’s disposable income. And they can only take on so much debt. Higher rates are going to drive up their minimum monthly payments.

But Disney should have more pricing power than some of its competitors.

 

[wabbott]

Erf...

https://finance.yahoo.com/quote/DIS?p=DIS

92.28-8.86 (-8.76%)
As of 01:19PM EDT. Market open.

 

[Jrb1979]

Erf...

https://finance.yahoo.com/quote/DIS?p=DIS

92.28-8.86 (-8.76%)
As of 01:19PM EDT. Market open.

Meanwhile...

Look I'm not totally against Disney, I just hate the direction they have gone. Iger has ruined WDW
This is a quote from another board

Basically…the Disney parks model…specifically at wdw…
Was to make mass profits off products driven by satisfaction and Emotion by the customers.

Iger rejected that in accordance with a whacked out consumer economic theory that doesn’t believe in “competition”

So they deliberately have done investment piecemeal to maintain artificial crowd pressures that lead to higher cost “escape” products. Everything is done to “escape” the crowd…instead of pushing it through as it spent en masse.

Well the downside now is they’re so far behind on response capacity and the construction timelines have been fouled to the point that they’re stuck.

They’re one building cycle behind at all times - deliberately - when they invented profiting off being one ahead

 

[RamblingMad]

View attachment 760030
Meanwhile...

Look I'm not totally against Disney, I just hate the direction they have gone. Iger has ruined WDW
This is a quote from another board

Basically…the Disney parks model…specifically at wdw…
Was to make mass profits off products driven by satisfaction and Emotion by the customers.

Iger rejected that in accordance with a whacked out consumer economic theory that doesn’t believe in “competition”

So they deliberately have done investment piecemeal to maintain artificial crowd pressures that lead to higher cost “escape” products. Everything is done to “escape” the crowd…instead of pushing it through as it spent en masse.

Well the downside now is they’re so far behind on response capacity and the construction timelines have been fouled to the point that they’re stuck.

They’re one building cycle behind at all times - deliberately - when they invented profiting off being one ahead

And MCU and Star Wars are running out of stream. I know folks that cancelled D+ because its new content is mostly those two IPs.

 

[firefly_ris]

They’re one building cycle behind at all times - deliberately - when they invented profiting off being one ahead

And it's not new either. They knew the monorail trains were well past their standard lifetime eons ago and still didn't plan ahead. Then they had PR nightmares when pieces of them started falling off, doors stuck open, etc. Why set yourself up for that. I don't understand it.

 

[jade1]

Reckon why depreciation increased? Isn't that supposed to be a relatively constant figure year to year?

Maybe Harmonious?

 

[RivShore]

Meanwhile...

I don't think Apple and Amazon belong in the discussion, their business models are just too different. But Netflix is interesting, ending the day up almost 3%. I suspect WS is coming to the conclusion that Netflix will be the leader in streaming long term, with Disney being a bit less of a threat to knock them off the top. To support that, all the other legacy media-streamers are down today - see WBD and PARA along with Disney.