Disney is set to report earnings as investors focus on ESPN, improving the broadcast’s losses
disney (Dis) will announce its fiscal fourth-quarter and full-year 2023 earnings after the bell on Wednesday after the official unveiling. The next CFO And Commitment to purchase Comcast’s 33% stake in Hulu.
Wednesday’s results mark the first time the media giant has turned a profit under CEO Bob Iger’s new reporting structure He reorganized the company into three core business segments: Disney Entertainment, which includes the entire media and streaming portfolio; Experience including gardening; and sports, which will include ESPN and ESPN+.
Here’s what Wall Street expects from the media giant, according to consensus estimates compiled by Bloomberg:
Total revenue: $21.43 billion
Adjective. Earnings per share: $0.69
Entertainment revenue: $13.23 billion
Sports revenue: $3.89 billion
Experience revenue: $8.19 billion
Disney+ subscribers: 2.68 million net additions expected
Disney’s stock has faced difficulties, declining by about 3% since the beginning of the year. The shares reached A The lowest level in nine years Last month, activist investor Nelson Peltz launchedAnother attackOn the media giant.
Kevin Mayer, the former head of Disney’s streaming division who now runs Blackstone-backed entertainment startup CandleMedia, He said that the stock is reacting to many uncertainties — from the future of Hulu and ESPN to the ultimate fate of linear networks — but Disney is starting to address some of these challenges.
“When the stock price rises and [Iger] “It articulates a great strategic vision — one that will address most of the problems,” he said at the Yahoo Finance Invest conference on Tuesday.
“Near-term issues” could cloud Disney’s future
Investors It was his first look in ESPN’s financials earlier this month. The new penetration structure showed that sports revenue trended lower in the nine months to July 1, 2023, down 1.3% compared to the same period last year.
Despite the decline, this is still better than the independent linear network’s revenue, which fell 8.7% over the same time period. ESPN represents less than 60% of the linear networks’ total revenue, or roughly 30% of operating income.
The company currently Search for strategic partnerseither through a joint venture or partial ownership, to enable ESPN to launch a new direct-to-consumer (DTC) service.
Mayer, who currently serves as a strategic advisor to CEO Bob Iger, said his former boss He is “definitely more focused on making sure that ESPN, a company he believes strongly in, is well-positioned for the future.”
“ESPN is a growing business, with positive revenue growth versus the traditional linear business,” Macquarie analyst Tim Nolen added in a note to clients ahead of the report. “Affiliate revenue from sports is declining modestly versus linearly, which can be offset by growth in subscription fees from ESPN+ and higher advertising revenues.”
Nollen, who has a Neutral rating on the stock and a $94 price target, says he expects the new independent linear sector to decline from the loss of pay-TV subscribers, coupled with advertising headwinds.
He said direct-to-consumer (DTC) losses should improve to $288 million due to lower content spending and other cost-cutting measures.
Streaming losses narrowed to $512 million in Disney’s fiscal third-quarter results, from a loss of $1.1 billion in the same period a year earlier. The company reported a streaming loss of $659 million in the second quarter and a loss of $1.1 billion in the first quarter.
“We believe in the long-term success of broadcast, including ESPN, as well as the studio and theme park franchises. But we see several near-term issues, most notably the process of putting ESPN on top which could lead to further linear disruption,” Nolen warned, adding, “We could Get DTC clarity.
The guidance will also be crucial, especially regarding Disney’s theme parks, which have had battles Signs of slowing demand Where inflation threatens margins. Macquarie’s Nolen said the sector was likely to slow this quarter, although operating profits were still expected to grow by double digits.
Parks division revenue beat expectations of $8.25 billion to reach $8.33 billion in the company’s third-quarter results. Operating income was $2.43 billion, beating estimates of $2.39 billion and higher than the third-quarter 2022 total of $2.19 billion.
The company plans to invest $60 billion in theme park business Over the next ten years.