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Media giant and theme park operator Disney () is scheduled to report results of its fiscal fourth quarter before the market open on Thursday, November 14, with a conference call scheduled for 8:30 pm ET. What to watch:
STREAMING: On August 7, Disney reported what CEO Robert Iger said was “a strong quarter for Disney, driven by excellent results in our Entertainment segment both at the box office and in DTC.” Disney “achieved profitability across our combined streaming businesses for the first time and a quarter ahead of our previous guidance,” Iger said. With a “complementary and balanced portfolio of businesses,” Disney is “confident in our ability to continue driving earnings growth through our collection of unique and powerful assets,” Iger added, noting that the company’s new full year adjusted EPS growth target was now 30%.With its last quarterly update, Disney reported that it had 118.3M Disney+ Core paid subscribers as of June 29, 2024, up 1% from 117.6M as of March 30 of this year. The company also reported total Hulu subscribers of 51.1M as of June 29, up 2% from 50.2M as of March 30.
SEAPORT RATING ROUNDTRIP: On the day after Disney’s Q3 report, Seaport Research analyst David Joyce from Buy without a price target. Disney’s Parks division is slowing and turning to a negative growth rate for the next few quarters, and its direct-to-consumer profitability has arrived but likely not generating as much as hoped in fiscal 2025 due to tech spending on interface features and ad capabilities, the analyst told investors at that time.Then, on September 30, Seaport Research from Neutral with a $108 price target. The firm cited “better macroeconomic underpinnings to the story” for the upgrade. Seaport sees a better macroeconomic outlook going forward and says investment sentiment on Disney is “seemingly willing to accept the current state” of the Parks demand and emergent direct-to-consumer profits “as a base from which to build.” Soft Parks data is likely temporary and Disney+ profitability is “getting the benefit of the doubt,” with recent price increases and paid sharing announcements possibly supporting further average revenue per user and subscriber growth, the analyst told investors.On October 1, Raymond James analyst Ric Prentiss from Outperform. The firm sees demand moderating at the company’s amusement parks after a strong post-Covid surge and says the shares are expected to remain range-bound as it contends that consumers are still digesting price increases taken in the past roughly four years, adding that “a questionable consumer outlook further complicates the picture.”More recently, Piper Sandler analyst Matt Farrell rating and $95 price target. The firm sees limited upside to estimates over the next few quarters given the moderation in the Disney’s experiences segment. The consumer-related slowdown within the company’s parks business will likely persist for a few more quarters, and with experiences representing 40% of segment operating income, Piper does not expect material upside, the analyst tells investors in a research note. Despite the near-term headwinds, the firm is a believer in the Disney “flywheel and the unique collection of assets in the industry, particularly following the recent film success.”In a preview published earlier this week, Evercore ISI analyst Vijay Jayant raised the firm’s price target on Disney to $128 from $105 and keeps an Outperform rating on the shares. The firm remains “bullish” into Disney’s Q4 print, where it expects another quarter of improving DTC profitability and strength from the Studio, partially offset by “well-understood softness” at the Theme Parks and “minor drags” from the DirecTV carriage dispute, the analyst tells investors in a preview. Looking to FY25, the firm sees continued momentum at DTC, a strong theatrical slate and muted Theme Parks results that should improve throughout the year, the analyst added.
CEO SUCCESSION: On October 21, Disney announced that its board of directors has named James Gorman as chairman of the board, effective January 2, 2025. He will succeed Mark Parker, who is departing the Disney board on January 2 after nine years of service. Gorman, who is executive chairman of Morgan Stanley () and will be stepping down from that role on December 31, is currently chair of the Disney board’s succession planning committee, which is working to identify and prepare the next chief executive officer of Disney.”A critical priority before us is to appoint a new CEO, which we now expect to announce in early 2026. This timing reflects the progress the Succession Planning Committee and the Board are making, and will allow ample time for a successful transition before the conclusion of Bob Iger’s contract in December 2026,” Gorman said, adding that the committee and board continue to review internal candidates and external candidates.On November 12, The Wall Street Journal’s Robbie Whelan, Emily Glazer and Jessica Toonkel that Disney is exploring fresh candidates in its search for a successor to CEO Bob Iger, including some from outside, as the board and its newly named chairman “move to bring order to a closely watched succession process.” Names that have surfaced in Disney’s deliberations in recent months include external candidates, such as Andrew Wilson, CEO of video game maker Electronic Arts (), sources told The Journal.
SPORTS STREAMING VENTURE: In mid-August, FuboTV () announced that has been successful in stopping the launch of Disney, Fox Corp. () and Warner Bros. Discovery’s () Venu Sports joint venture after its request for a preliminary injunction was approved by the U.S. District Court, Southern District of New York. David Gandler, Fubo co-founder and CEO, commented: “Today’s ruling is a victory not only for Fubo but also for consumers. This decision will help ensure that consumers have access to a more competitive marketplace with multiple sports streaming options. But our fight continues.”In a joint statement following that news, Fox , Disney’s ESPN and Warner Bros. Discovery, the Venu Sports partners, said: “We respectfully disagree with the court’s ruling and are appealing it. We believe that Fubo’s arguments are wrong on the facts and the law, and that Fubo has failed to prove it is legally entitled to a preliminary injunction. Venu Sports is a pro-competitive option that aims to enhance consumer choice by reaching a segment of viewers who currently are not served by existing subscription options.”
HULU PRICE: In a regulatory filing on the day of its last earnings report, Disney said: “In November 2023, NBC Universal (CMSCA) exercised its right to require the company to purchase NBCU’s 33% interest in Hulu LLC at a redemption value based on NBCU’s equity ownership percentage of the greater of Hulu’s equity fair value or a guaranteed floor value of $27.5B. In connection with the redemption, the company will pay NBCU 50% of the future tax benefits from the amortization of the purchase of NBCU’s interest in Hulu as the company’s cash tax benefits are realized, generally over a 15-year period. In December 2023, the company paid NBCU $8.6B, which reflected the guaranteed floor value less NBCU’s unpaid capital call contributions. If Hulu’s equity fair value is determined pursuant to a contractual appraisal process to be higher than the guaranteed floor value, the company is required to pay NBCU its share of the difference between the equity fair value and the guaranteed floor value… If the third appraiser’s equity fair value determination were equal to or below the guaranteed floor value, the company would not be required to pay NBCU any additional amount. Conversely, if NBCU’s appraisal were deemed to be valid and the third appraiser’s equity fair value determination were consistent with the NBCU’s appraiser’s valuation, the company would be required to pay NBCU an additional amount of approximately $5B as its share of the difference between the equity fair value and the guaranteed floor value. If the third appraiser’s equity fair value determination were between the valuations of the company’s and NBCU’s appraisers, the incremental amount would likewise be between zero and approximately $5B.”
CONSENSUS: In terms of overall results for the fiscal fourth quarter, analysts are calling for Disney to report total revenue of $22.44B. The consensus Q4 earnings forecast stands at $1.10 per share, according to LSEG Data and Analytics.For the December-end quarter, analysts’ consensus currently calls for revenue of $24.67B and for the “House of Mouse” to post a profit of $1.33 per share, according to LSEG Data.More By This Author:
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