Disney's 4 divisions are expected to make $70.9 billion in revenues for FY 2020 (Disney's financial year ends on September 30)
(1) Media Networks $22.5 billion (32%);
(2) Parks & Resorts $20.5 billion (29%);
(3) Studio Entertainment $9.4 billion (13%);
(4) Direct-to-Consumer $20.5 billion (29%); and
(5) Eliminations/Corporate -$2.0 billion (-3%)
WHAT IS BIG?(1) Media Networks $22.5 billion (32%)(2) Parks & Resorts $20.5 billion (29%)
(3) Studio Entertainment $9.4 billion (13%)
(4) Direct-to-Consumer $20.5 billion (29%)
TOTAL Revenues in 2020 $70.9 billion
WHAT HAS CHANGED?
From 2017-2020 + Change in Media Networks $1.2 billion + Change in Parks&Resorts -$2.5 billion + Change in Studio Entertainment -$1.0 billion
+ Change in Direct-to-Consumer $17.4 billion
- Change in Eliminations $1.4 billion
TOTAL Change 2017-2020 $15.8 billion
Disney's direct-to consumer business, which makes revenue by charging fees from distributors for delivering its channels, selling advertising space/time and subscription fees charged for streaming services, is expected to contribute $20.5 billion to Disney's 2020 revenues, making up 29% of Disney's $70.9 billion in total revenues for 2020.This contribution is expected to remain stable in FY 2021, with the segment revenue touching $23 billion, but revenue from other segments also picking up post coronavirus.Direct-to-consumer is set to be the fastest growing segment for Disney, with it providing $13.7 billion in additional revenue over the next 2 years.With Hulu's and Fox's consolidation having helped the segment add over $6 billion in FY 2019, Disney+ is set to be the next big thing for the division as well as the company.The revenue growth expected due to Disney+ has been key to Disney's stock price appreciation from Nov 2019 to Feb 2020, before coronavirus crisis. We discuss Disney's Valuation analysis in full, separatelyBelow we discuss Disney's total revenue trends and expectations, along with segment-wise revenue analysis.
Disney Business Model and Operating Segments
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with 6 business segments as explained here.
1) Media Networks
a) Affiliate fees - Fees for ESPN, Freeform, NatGeo, etc. from distributors & other service providers
b) Advertising - Revenue from ads on ESPN, Fox, and other Disney networks.
c) TV/SVOD distribution - Fees from the use of Disney's television programs and productions
2) Parks, Experiences & Products
Includes revenue from sale of: tickets, merchandise, food & beverages, merchandise, per night hotel stay
3) Studio Entertainment
a) Theatrical distribution - Fox movie distribution, licensing Disney movies to theatres
b) Home entertainment - Sale of Disney movies in DVD, Blu-ray and electronic formats
c) TV/SVOD distribution and other - Fees from use of its movies for streaming, content transactions, ticket sales from stage plays, and fees from licensing its IP
4) Direct-to-Consumer and International
a) Fees charged for ESPN, Fox, NatGeo outside US
b) ESPN, Fox, NatGeo ad revenue outside US.
c) Subscription fee for Hulu, Disney+
In March 2019, Disney acquired FOX for $71.3 billion. Disney also now owns former Fox television networks such as FX Networks and National Geographic Partners. Post the deal, Disney has a controlling share of 60 percent in Hulu, and also gained a few movie studios.
Disney's Total Revenue increased 26% from $55.1 billion in 2017 to $69.6 billion in 2019, driven by sharp rise in 2019 due to acquisition of Fox Studios. Revenue is likely to increase marginally by 1.9% to $70.9 billion in FY 2020 (due to adverse impact of coronavirus) and grow faster to $81.1 billion in 2021, following the launch of Disney+ and consolidation of Hulu
% Change in Total Revenue
(3) Studio Entertainment Revenue increased from $8.4 Bil in 2017 to $11.1 Bil in 2019
Theatrical distribution increased due to 4 significant Disney live-action titles, Lion King, Aladdin, Mary Poppins Returns and Dumbo Home entertainment revenue increased due to benefits of Fox acquisition, partially offset by lower unit sales in 2019, as bigger names like Avengers released in the prior year
Acquisition of Fox also helped in TV/SVOD distribution because of more content and audience
Studio Entertainment (A+B+C)
Theatrical Distribution (A)
Home Entertainment (B)
TV/SVOD distribution & other (C)
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