Disney Q2 Earnings report

[rteetz]

Disney Quarter 2 fiscal earnings.
http://www.laughingplace.com/w/articles/2017/05/09/disney-fy17-q2-earnings-live-blog/

Revenue is $13.34 Billion

Parks and Resorts profit grew 20% compared to last year

Growth comes mainly from Disney Studios and Parks and Resorts

Consumer Products and Interactive Media is down 11%

Disneyland Shanghai was profitable for the first time since opening.

Bob Iger believes new packages such as DirecTV Now will help ESPN.

Iger reiterates ESPN direct to consumer product by the end of the year.

Iger is confident the board will find the right person to replace him.

Iger has missed the first two Economic Advisory councils with Trump but hopes to be at the next one.

Shanghai Disneyland will hit 10 million visitors within days.

They are looking at expanding the Shanghai Disney Resort

Decrease in consumer products was due to slow down in Star Wars and Frozen merchandise.

80% of people who access ESPN do it from a mobile device.

Disney has 11 Franchises that generate over $1 billion in retail sales.

Disney expects Shanghai slow down in Q3 due to change in seasons.

Disney offered promotions to drive park attendance, due to timing of Spring Break and end of 60th anniversary at Disneyland.

NBA deal will have a major impact on next quarter due to costs.

Disney expects to invest more in the parks.

Disney expects to repurchase $9-10 billion in shares.

Bob Iger highlights new cruise ships and unannounced hotel plans as avenues for growth.

Iger says that another growth opportunity for the parks is adding more intellectual property to them.

Iger says Disney does not have current plans to take main ESPN product to direct to consumer but sees it eventually happening.

They expect ESPN to continue to be a multi-channel product for the foreseeable future.

Iger wants to secure Disney's film future, figure out ESPN, and continue to grow Disney's leadership team in his remaining time.

 

[lockedoutlogic]

Hmmm...there's ALOT of hidden realities in those blips...

Can anyone find them?

 

[Lightsoutx12]

Pretty interesting, I wonder what new resorts could be in mind and what else they want to invest in the parks.

 

[rteetz]

Hmmm...there's ALOT of hidden realities in those blips...

Can anyone find them?

NBA, ESPN, Succession, and stock buybacks?

 

[Lesverts]

Pretty interesting, I wonder what new resorts could be in mind and what else they want to invest in the parks.

There is one announced for Disneyland no?

 

[rteetz]

There is one announced for Disneyland no?

Yes.

 

[lockedoutlogic]

NBA, ESPN, Succession, and stock buybacks?

Atta Boy...

Stock buybacks (expecting rough seas ahead)

Espn and the albatross NBA contract (big reason for the rough seas)

Succession (they have zero plan still)

And I'll add:

Crap isn't selling (because less people have any money to buy it)

And the prices at parks are going to continue on rocket boost (because they are exploiting the awful consumer which only encourages more exploitation...which is my main point around here)

 

[mikepizzo]

What would Disney look like if it just got rid of ESPN and didn't have to deal with it anymore? Would they be better off?

 

[dlavender]

What would Disney look like if it just got rid of ESPN and didn't have to deal with it anymore? Would they be better off?

At a quick glance at their consolidated financials, its hard to say how much Disney values ESPN as an asset. It's probably worth about 25-30 billion in its current state, as it was estimated to be worth 50 billion in 2014. I believe last year their cable networks generated 6.748 billion in operating profit. This includes all of their cable networks. Let's say ESPN represents at least half. That's at least 3 billion in operating profit. If they could sell ESPN for 30 billion, and reinvest that money in another property or venture that would generate at least 3 billion, then they would be better off. The problem with ESPN is that the operating profit is almost guaranteed to decline each year moving forward, given the current landscape. I'd look for a suitor.

 

[MommaBerd]

No doubt, ESPN reached its zenith awhile back. However, it also has a floor - it's not as if *no one* will want ESPN as part of its bundle. And my guess is that it will stabilize somewhere in between...

 

[dlavender]

No doubt, ESPN reached its zenith awhile back. However, it also has a floor - it's not as if *no one* will want ESPN as part of its bundle. And my guess is that it will stabilize somewhere in between...

The problem with ESPN that WDW has is that even though it remains profitable, and most likely will always be profitable to some degree, is that the equity lost has to be made up somewhere, or else the entire consolidated financial picture takes a hit.

So if ESPN looses 10 billion in value, another part of the company has to gain 10 billion. At least to keep shareholders happy.

 

[MommaBerd]

The problem with ESPN that WDW has is that even though it remains profitable, and most likely will always be profitable to some degree, is that the equity lost has to be made up somewhere, or else the entire consolidated financial picture takes a hit.

So if ESPN looses 10 billion in value, another part of the company has to gain 10 billion. At least to keep shareholders happy.

Makes sense...

 

[Lesverts]

The problem with ESPN that WDW has is that even though it remains profitable, and most likely will always be profitable to some degree, is that the equity lost has to be made up somewhere, or else the entire consolidated financial picture takes a hit.

So if ESPN looses 10 billion in value, another part of the company has to gain 10 billion. At least to keep shareholders happy.

I am pretty sure there is a structure within US tax law that allows a company to write down a decreased valuation of an asset as a lose and reap the tax benefits of that write down.

 

[dlavender]

I am pretty sure there is a structure within US tax law that allows a company to write down a decreased valuation of an asset as a lose and reap the tax benefits of that write down.

That's true. They also would have to factor in the depreciation they have used in relation to the write down amount, so if any depreciation has to be recaptured, then there is sometimes not a large gain in writing down the decreased valuation.

Even with the tax benefit of 1 or two years of a write down, you are still seeing a declining operating profit YOY. Unless that at least stabilizes, you will have some friction.

 

[mshanson3121]

Hmmm...there's ALOT of hidden realities in those blips...

Can anyone find them?

Nope, I was reading all that, hoping someone would put it into "For Dummies" terms. I can't tell if it was better, worse or about the same as last quarter. If they're thriving, struggling or basically status quo. But to me, that they're talking about buying back shares, doesn't sound good to me.

 

[rteetz]

Nope, I was reading all that, hoping someone would put it into "For Dummies" terms. I can't tell if it was better, worse or about the same as last quarter. If they're thriving, struggling or basically status quo. But to me, that they're talking about buying back shares, doesn't sound good to me.

As evidenced in this thread and various other places on here and the internet this quarter wasn't as great as expected due to ESPN concerns.

 

[mshanson3121]

As evidenced in this thread and various other places on here and the internet this quarter wasn't as great as expected due to ESPN concerns.

So basically the first two quarters have been disappointing. Ultimately, how does this affect the average traveler? I'm assuming it boils down to the same old? As in, expect to see more increases in price in food, lodging, merchandising, ticket increase etc? With perhaps an increase in discount offerings so the customer is tricked into thinking they're getting a good deal?

 

[rteetz]

So basically the first two quarters have been disappointing. Ultimately, how does this affect the average traveler? I'm assuming it boils down to the same old? As in, expect to see more increases in price in food, lodging, merchandising, ticket increase etc? With perhaps an increase in discount offerings so the customer is tricked into thinking they're getting a good deal?

Yes for the most part. Disney has said they are looking to invest more into the parks though however that will be all IP.

 

[lockedoutlogic]

So basically the first two quarters have been disappointing. Ultimately, how does this affect the average traveler? I'm assuming it boils down to the same old? As in, expect to see more increases in price in food, lodging, merchandising, ticket increase etc? With perhaps an increase in discount offerings so the customer is tricked into thinking they're getting a good deal?

Espn has been Disney's main profit generator since it was bought...

...it is on a permanent decline, therefore they will go to the next biggest profit generator to make up the gap...

...guess who's wallet(s) that is/are?

 

[Laz]

While I also concluded that the main reason fort the stock buy back is to keep the Per Share values at acceptable levels, could they also be trying to prevent any possible take over by keeping the ownership "close to home" so to speak? It seems like the more stock floating around on the market, the more tempting it is for another company to start buying it up.