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Speaker 3: Let's take a look at some of the stocks on
Speaker 3: the move. I'm Paul swinging alongside Isabelle Lee. One of
Speaker 3: my companies I used to cover, the Walt Disney Company,
Speaker 3: making Mouse. That reported some numbers, better than expected numbers,
Speaker 3: so of course stocks them. So. The Walt Disney Company
Speaker 3: reported better than expected third quarter earnings, with continued growth
Speaker 3: at its parks and streaming business overshadowing a tough climate
Speaker 3: for movies and traditional TV. Let's break it down with
Speaker 3: Keitha Rung andough that she covers all the media stuff
Speaker 3: for Bloomberg Intelligence. Githa's it seemed to me like, on
Speaker 3: the surface, a pretty good quarter for Disney. What's the
Speaker 3: street a little concerned about?
Speaker 4: Yeah, really good quarter for Disney. Paul, the beaten raise
Speaker 4: for sure, you know, expectations might have been, you know,
Speaker 4: slightly high, and the fact that they didn't necessarily give
Speaker 4: us any specific guide for fiscal twenty twenty six. They
Speaker 4: did point to a raised guidance for EPs growth for
Speaker 4: fiscal twenty twenty five eighteen percent now instead of sixteen percent.
Speaker 4: But they didn't necessarily give us anything specific for fiscal
Speaker 4: twenty twenty six. That could be a slight source of disappointment.
Speaker 4: Other than that, the only other thing that I think
Speaker 4: might be causing this reaction is that they did say
Speaker 4: that they will stop disclosing Disney Plus subscriber numbers. But again,
Speaker 4: this is not something totally unexpected. I mean, Netflix has
Speaker 4: stopped doing this. We're seeing this kind of move away
Speaker 4: from just subscriber numbers to a greater focus and profitability.
Speaker 1: I want to zero in on parks because I'm still
Speaker 1: scarred by how expensive it was when I visited a
Speaker 1: couple of years ago as an adult. But how sustainable
Speaker 1: is there strong parks performance given the divergent domestic and
Speaker 1: international performance.
Speaker 4: Very sustainable, Isabell. So you know, we saw domestic parks,
Speaker 4: and I say that because you know, domestic parks actually
Speaker 4: coming into this year, coming into this quarter, there were
Speaker 4: a lot of worries, one of course, about the general
Speaker 4: macroeconomic environment, but the bigger source of worry was really
Speaker 4: the opening of Epic Universe, which is, you know, Universal's
Speaker 4: big Florida Theme parket traction. But the fact that it
Speaker 4: had absolutely no impact at all, or very very modest impact,
Speaker 4: if at all, is really amazing, and it just kind
Speaker 4: of speaks to the resilience in Disney's business model. They
Speaker 4: reported again, very very strong per capita growth, you know,
Speaker 4: in terms of food and beverages, in terms of concessions,
Speaker 4: so all of that doing really well. And the reason
Speaker 4: I'm so positive about this business going forward. First of all,
Speaker 4: it contributes about fifty five to sixty percent of Disney's profits,
Speaker 4: are really really important to their top line, to their
Speaker 4: bottom line. Definitely, they have a lot of upcoming capacity,
Speaker 4: So the biggest source of expansion over the next few
Speaker 4: months is really going to be their cruise ships. They're
Speaker 4: launching two new cruise ships, their biggest ever actually, which
Speaker 4: is going to come on board in November and December.
Speaker 4: One of them sets sail from Asia, and that basically
Speaker 4: takes the number of cruise ships to eight cruise ships,
Speaker 4: effectively kind of doubling their capacity in a span of
Speaker 4: just two to three years. So that is going to
Speaker 4: really buoy you know, both top line and bottom line
Speaker 4: going into twenty twenty six. And then beyond that, you
Speaker 4: really have this huge sixty billion capital expansion plan that
Speaker 4: is really going to play out over the next five
Speaker 4: to ten years. So we're going to see a lot
Speaker 4: more attractions all over the world. We're going to see
Speaker 4: that new Abu Dhabi park come out. So there is
Speaker 4: really a lot of you know, a sustained momentum that
Speaker 4: we can expect at the park's going forward.
Speaker 3: Eitha talk to us about that deal they just made
Speaker 3: with the NFL. It seems like a really positive development
Speaker 3: for the company.
Speaker 4: Yeah, it's really good. I think from a Disney from
Speaker 4: an ESPN standpoint that they're so closely aligned now with
Speaker 4: the NFL. I mean, the NFL is absolutely the premium property,
Speaker 4: the gold standard, Paul. You know this well when it
Speaker 4: comes to you know, sports properties in the in the US.
Speaker 4: And the fact now that they're going to be able
Speaker 4: to use all of this content for their upcoming ESPN
Speaker 4: streaming launch, I mean that itself just kind of give
Speaker 4: gives it a tremendous boost, I think even before you
Speaker 4: know it come on board. So it's great for the product.
Speaker 4: It's also great from a strategic standpoint because the NFL
Speaker 4: is obviously one of the most important sports properties, and
Speaker 4: this really gives them access or it at least definitely
Speaker 4: gives them a little bit of an advantageous position compared
Speaker 4: to let's say, an Amazon or a Netflix or an
Speaker 4: Apple if they want to ever outbid you know, the
Speaker 4: current media partners. So definitely, I think a strategically, very
Speaker 4: very sound move on the part of Disney.
Speaker 1: So it seems like we had a good quarter. Runway
Speaker 1: for growth is really just long and wide. What downside
Speaker 1: risks remain then, especially around the macro uncertainty and tiriff exposure.
Speaker 4: Do you see, Yeah, maybe a little bit of execution risks.
Speaker 4: So we still really don't know how this whole. I mean,
Speaker 4: obviously everybody is very excited for the ESPN product launch,
Speaker 4: but we still don't know how exactly that's going to
Speaker 4: play out. Again, a huge source of upside is going
Speaker 4: to be the streaming business. Everybody's expecting huge cost savings
Speaker 4: when it comes to the integration of Hulu and Disney Plus.
Speaker 4: But again, execution is a little bit of a risk.
Speaker 4: And then you pointed out you know macro factors. Remember,
Speaker 4: Disney still obviously has huge exposure because of its parks
Speaker 4: business and anytime we see kind of a slowdown in
Speaker 4: the economy. We do feel that in the parks as well.
Speaker 4: And of course advertising also, so you know, they do
Speaker 4: have a substantial exposure to advertising because of their TV
Speaker 4: network's business. So there again we can see a little
Speaker 4: bit of an impact. But overall, as it stands right now,
Speaker 4: the business seems to be in really good shape all
Speaker 4: right here.
Speaker 3: The problem childs though, are the broadcast networks and the
Speaker 3: cable networks. What you know, just because of cord cutting,
Speaker 3: that they're just declining businesses. What's the company saying that,
Speaker 3: what we're going to do with those businesses.
Speaker 4: They haven't said anything explicitly, Paul. So a few years ago,
Speaker 4: you know, this idea was floated that maybe they kind
Speaker 4: of spin off ABC, their broadcast network, maybe they spin
Speaker 4: off their linear cable channels, all of that. You know,
Speaker 4: noise is kind of quietened down. You know. Barbiger basically said, no, no, no,
Speaker 4: we need these businesses. They're all kind of integral to
Speaker 4: the whole Disney story. So we haven't heard anything recently
Speaker 4: that being said. Just this whole deal with the NFL
Speaker 4: and the NFL kind of day an equity stake. It
Speaker 4: almost seems like they are prepping for ESPN to kind
Speaker 4: of ESPN and maybe ABC to kind of coast solo. Remember,
Speaker 4: Bob Eiger only has a few more months left, so
Speaker 4: the end of twenty twenty six he leaves Disney, or
Speaker 4: at least that's what he says. Yeah, we think, and
Speaker 4: I really think he kind of wants to get this
Speaker 4: deal done so to separate ESPN because it's not really
Speaker 4: core to the rest of the Disney properties. But again
Speaker 4: it's a little bit of a wait and watch, but
Speaker 4: nothing explicitly, you know, stated from Disney management about what
Speaker 4: they want to do with the linear piece of the business.
Speaker 1: So ESPN is getting a fresh spin with an August
Speaker 1: twenty one launch. It will be thirty dollars a month
Speaker 1: for the new streaming up. What do you make of
Speaker 1: that price you think people will pay up for it?
Speaker 1: Or is that steep?
Speaker 4: It's a high price point, There's no doubt about it.
Speaker 4: I think most people were kind of expecting somewhere in
Speaker 4: the twenty three to twenty five dollars range. That said,
Speaker 4: what you know, we just ran a survey actually at
Speaker 4: Bloomberg Intelligence, and what we found is that there's actually
Speaker 4: a lot of interest in this product, so we think
Speaker 4: that the update will be fairly strong, and the update
Speaker 4: not so much as a standalone product, but when you
Speaker 4: bundle it with Disney Plus and Hulu, so they are
Speaker 4: running a pretty attractive promotion. So for the first year,
Speaker 4: you can get Disney Plus, Hulu and ESPN at a
Speaker 4: thirty to thirty dollars price point, which which seems like
Speaker 4: really good value. So I think we're going to see
Speaker 4: a lot of people come in initially through the bundles
Speaker 4: at least.
Speaker 3: All right, great stuff as always, Keitha, thank you so
Speaker 3: much for chatting with Uskeitha Ranganath, and she's the media analyst.
Speaker 3: The media anamals the Bloomberg Intelligence covering all those fun
Speaker 3: companies in the media space. And Disney again, pretty good quarter,
Speaker 3: maybe not quite up to expectations at mickey Mouse.
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