Speaker 1: Okay, Well, joining us now is that Gita Ranganatha Bloomberg
Speaker 1: Intelligence techn Media and is having a look at disney earnings,
Speaker 1: which came out essentially beat. We do have them topping
Speaker 1: those profit views, but it's also raising the price of
Speaker 1: its flagship Disney Plus streaming service. It's ad free version anyway,
Speaker 1: by thirty eight percent, all designed to generate more revenue.
Speaker 1: What did you make of the overall picture that Disney
Speaker 1: actually drew? So the overall picture, in my view, Rashad
Speaker 1: was very very strong. So you know, we saw them
Speaker 1: come ahead of their streaming subscriber guidance or we were
Speaker 1: expecting about ten million subscribe new subscribers. They delivered about
Speaker 1: fourteen point four million. They confirmed that they're seeing an
Speaker 1: acceleration in that course of course subscription product through fiscal
Speaker 1: fourth quarter. So expect all their new content launches as
Speaker 1: well as their new market launches to kind of bear
Speaker 1: fruit as they finish out this fiscal year in September.
Speaker 1: And then what you know, the question that the market
Speaker 1: has really been asking, which is do these streaming services
Speaker 1: have pricing power? And you know, Disney seems to think
Speaker 1: it does. There obviously, as you just pointed out, they're
Speaker 1: raising their prices, but they're also kind of cushioning that
Speaker 1: blow a little bit because they're offering on December eight,
Speaker 1: they're going to debut an add supported service at the
Speaker 1: same time, which basically means that anybody who wants to maybe, um,
Speaker 1: you know, cut back on their expenses has that option. Uh,
Speaker 1: And so they're going to try and control chun in
Speaker 1: that way. So it's a it's a statement of confidence. Um,
Speaker 1: they're adding subscribers and they're raising prices, and and the
Speaker 1: market has picked up on this. It was already up
Speaker 1: four percent in the regular session and as Doug mentioned,
Speaker 1: gaining six point eight percent in in after hours, and
Speaker 1: in fact of late it has outperformed peers and it's
Speaker 1: also outperformed the SMP. That's all well and good, but
Speaker 1: the stock was down pretty hard earlier. And one question remains,
Speaker 1: you know, partial looking good and all that, but does
Speaker 1: that continue if you go to recession? Probably not. Yeah,
Speaker 1: that that's a very very important question. Brian and I
Speaker 1: think they were asked this question repeatedly on the call
Speaker 1: about any signs of softening that they're seeing with consumer spending,
Speaker 1: and their resounding answer and they kept repeating this was
Speaker 1: was no um and that even if there was a
Speaker 1: slight softening, which I think is inevitable, they have multiple
Speaker 1: levers to keep that profit machine running. So what they've
Speaker 1: done is they have instituted, they've they've kind of taken
Speaker 1: their or they've used the pandemic very They've used that
Speaker 1: time really wisely to kind of implement all of these
Speaker 1: operational efficiencies. They have this new reservation system, they have
Speaker 1: this new virtual assistant called Genie Plus, which basically reduces uh,
Speaker 1: you know, waiting times in lines. So they have all
Speaker 1: these things which kind of improve their real management kind
Speaker 1: of um, you know, spread out attendance, smoothing out any
Speaker 1: peaks and valleys. And what that has done is that
Speaker 1: has really kind of boosted profits immensely. And so we're
Speaker 1: seeing operating margins that are way higher than you know,
Speaker 1: pre pandemic levels. And now what they're saying is that
Speaker 1: they're also seeing the benefit of international visitation kind of
Speaker 1: kicking in at the domestic parks and that should keep
Speaker 1: those margins at an elevated level. So is there a
Speaker 1: possibility that we see a slowdown? Yes, how bad is
Speaker 1: it going to be? Maybe not too bad, because I
Speaker 1: think they have multiple levels that they can kind of
Speaker 1: pull well into. T thing is gither they have this
Speaker 1: amazing target for subscriber growth then they I think they
Speaker 1: said this a couple of years ago, and they're looking
Speaker 1: at what two sixty million of them by the fiscal
Speaker 1: two thousand and twenty four. Yes, they actually did walk
Speaker 1: that back a little bit. Um So one of the
Speaker 1: main growth drivers for subscribers to the Disney Plus service
Speaker 1: has that been their Indian streaming platform, which is called
Speaker 1: hot Star. And the main reason why hot Star has
Speaker 1: been such a runaway success has been because of the
Speaker 1: cricket streaming rights that it that it boasts of, so
Speaker 1: it's called the Indian Premier League the I p L Cricket. Now,
Speaker 1: what Disney did is they made a very conscious decision
Speaker 1: to walk away from the streaming rights for you know,
Speaker 1: that that property because it was way too costly and
Speaker 1: it was going to kind of mess up their profitability goals.
Speaker 1: So with that in mind, they actually did walk back
Speaker 1: guidance slightly. Uh So, now instead of two hundred instead
Speaker 1: of an upper range of about two hundred and sixty million,
Speaker 1: they're guiding to about two d thirty million, But I
Speaker 1: don't think the market is going to punish them for
Speaker 1: this only because this is mainly due to the fact
Speaker 1: that you know that the so so Hot Star subscriber essentially, yes,
Speaker 1: there's a lot of volume on that platform, but but
Speaker 1: the but the subscriber quality itself is pretty low because
Speaker 1: they basically bring in about just one dollar per month
Speaker 1: versus about seven dollars for you know, a non Hot
Speaker 1: Star subscriber. So you know, profitability again is well intact,
Speaker 1: just a quick question. You know, we've had a lot
Speaker 1: of trouble in China with the lockdowns. How is China
Speaker 1: looking at the moment with the park there? Yeah, they
Speaker 1: actually just just reopened the park in in Shanghai. They
Speaker 1: said it's you know, so far momentum has been good,
Speaker 1: but I think it's going to take a while for
Speaker 1: it to kind of really get back to full capacity.
Speaker 1: But so far it says it's pretty much in line
Speaker 1: with expectations. It could be good down the road, I suppose,
Speaker 1: and also ESPN where it used to be one of
Speaker 1: the reasons you sold Disney now looking a lot better
Speaker 1: anyway out of time geta but always a pleasure love
Speaker 1: having you on the show geta Ranganathan Bloomberg Intelligence tech
Speaker 1: and media analyst. Boy, they've got some good people there.
Speaker 1: This is Bloomberg