Walt Disney Company Earnings Report

[BradyBzLyn...Mo 2,023]

 

BURBANK, Calif. –

The Walt Disney Company today reported record quarterly earnings of $2.5 billion for its third fiscal quarter ended June 27, 2015 compared to $2.2 billion for the prior -year quarter. Diluted earnings per share (EPS) for the third quarter increased 13% to $1.45 from $1.28 in the prior -year quarter. EPS for the nine months ended June 27, 2015 increased 16% to $3.95 from $3.40 in the prior-year period.  Excluding certain items affecting comparability(1), EPS for the nine months increased 15%.

"We’re very pleased with our performance in the third quarter, with record net income and diluted earnings per share of $1.45, up 13% from the prior year,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “The strong results across our many diverse lines of business demonstrate the power of our unparalleled brands, franchises and creative content."

 

Full report is here...

https://cdn.thewaltdisneycompany.com/sites/default/files/reports/q3-fy15-earnings.pdf

[Travisma 1,317]

Oops, they wanted 14%.

Raise the Fort rates to make it so for the next quarter!

And break out some new Frozen merchandise.

[Travisma 1,317]

It's not the "Core" that's losing $$ but it's peripheral brands...

 

 

 

Disney’s cable outlook dismays some, but analysts still like the company

 

By

TreyWilliams

Reporter

 

The Walt Disney Co. shares were down as much as 9% on Wednesday and were poised to suffer their biggest-ever one-day price drop after the company reported fiscal third-quarter earnings after Tuesday’s close.

Profit rose a better-than-expected 11%, buoyed by the success of the company’s film studio division, but revenue fell short amid slower growth at TV networks and theme parks. The company DIS, -9.37%  revised the outlook for its cable business slightly lower, blaming cord-cutting as well as dollar strength. Chief Financial Officer Christine McCarthy said the dollar would shave $500 million off fiscal 2016 operating profit because the company was unable to purchase currency hedges at attractive rates.

Analysts were mixed in their assessment of the numbers.

Jefferies analyst John Janedis downgraded the stock to market perform from buy, and lowered his price target to $112 from $125.

“The reduced subscriber growth is an ongoing industry trend which we expect to hear more about throughout earnings season,” Janedis wrote in a note. “However, with ESPN’s largely fixed programming slate (i.e. sports rights), the impact on [operating income] will be slightly more pronounced vs. peers.”

 

ESPN suffered some subscriber losses in the quarter, though Disney Chief Executive Bob Iger declined to specify details during the earnings call. The “Worldwide Leader in Sports” has dropped some of its big-name talent like Bill Simmons and Keith Olbermann to help offset the costs as subscriber numbers decline.

 

Live sports continues to be the main tether to the linear pay-TV bundle. While Iger said recent cable and satellite deals open the door for Disney to offer ESPN as a standalone Internet service, he said he doesn’t expect dramatic declines in cable subscriptions over the next five years.

“Subscriber declines have been less than has been commonly reported by Nielsen,” Stifel Nicolaus analyst Benjamin Mogil wrote in a note, maintaining his buy rating on the stock with a $130 price target.

“By [Disney’s] estimate, most of the subscriber declines have been attributed to cord-cutting as opposed to skinny bundle adoptions,” he wrote. Advertising for ESPN was down 3% in the quarter, though Mogil noted it was being compared with the quarter that included last year’s men’s FIFA World Cup.

 

One division showed clear strength. Disney’s film business has been on a tear of late. Box office hits “Avengers: Age of Ultron,” “Cinderella” and strong carry over from “Frozen” merchandise helped to push solid third-quarter sales.

Of the 21 analysts tracked by FactSet, 12 have buy or overweight ratings on Disney’s stock and nine rate it a hold. Three analysts lowered their price targets, and five increased them. The average price target on FactSet is $121.88.

The company continues to be attractive to J.P. Morgan Chase analyst Alexia Quadrani, who increased her price target to $130 from $121.

“We acknowledge the ecosystem is changing and sub declines will remain a headwind for cable networks growth,” Quadrani said in a note. “However, we believe Disney is the best positioned amongst its peers with some of the most highly demanded content, and can offset much of these declines with established rate increases and growth in [over-the-top] platforms.”

 

[keith_h 420]

It's not the "Core" that's losing $$ but it's peripheral brands...

 

 

 

Disney’s cable outlook dismays some, but analysts still like the company

 

....

Profit rose a better-than-expected 11%, buoyed by the success of the company’s film studio division, but revenue fell short amid slower growth at TV networks and theme parks. The company DIS, -9.37%  revised the outlook for its cable business slightly lower, blaming cord-cutting as well as dollar strength.

 

....

Jefferies analyst John Janedis downgraded the stock to market perform from buy, and lowered his price target to $112 from $125.

“The reduced subscriber growth is an ongoing industry trend which we expect to hear more about throughout earnings season,” Janedis wrote in a note. “However, with ESPN’s largely fixed programming slate (i.e. sports rights), the impact on [operating income] will be slightly more pronounced vs. peers.”

 

ESPN suffered some subscriber losses in the quarter, though Disney Chief Executive Bob Iger declined to specify details during the earnings call. The “Worldwide Leader in Sports” has dropped some of its big-name talent like Bill Simmons and Keith Olbermann to help offset the costs as subscriber numbers decline.

 

Live sports continues to be the main tether to the linear pay-TV bundle. While Iger said recent cable and satellite deals open the door for Disney to offer ESPN as a standalone Internet service, he said he doesn’t expect dramatic declines in cable subscriptions over the next five years.

“Subscriber declines have been less than has been commonly reported by Nielsen,” Stifel Nicolaus analyst Benjamin Mogil wrote in a note, maintaining his buy rating on the stock with a $130 price target.

“By [Disney’s] estimate, most of the subscriber declines have been attributed to cord-cutting as opposed to skinny bundle adoptions,” he wrote. Advertising for ESPN was down 3% in the quarter, though Mogil noted it was being compared with the quarter that included last year’s men’s FIFA World Cup.

 

 ....

 

 

This doesn't surprise me. The traditional paradigm of providing content over a cable/satellite TV channel is dieing. With the better picture quality and additional channels of over the air stations there is no advantage to cable. Not to mention you get the commercials for free. Likewise with the advent of streaming the ability to see a wider range of content than you can see on cable at a reasonable price has exploded. It will take time but what Disney and other traditional cable channel providers need to do is offer direct streaming as that is the future whether they like it or not.