What To Expect From Disney’s Fiscal Fourth Quarter Results

by Trefis Team
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Disney (NYSE: DIS) is scheduled to announce its fiscal fourth quarter results on Thursday, November 9. The company reported mixed fiscal third quarter earnings, as its earnings came in ahead of market expectations but revenues missed. The company’s revenue was flat at $14.3 billion, primarily due to the full-year operations of Shanghai Disney Resort, increased attendance and guest spending at domestic parks and resorts, and growth in affiliate revenues, partially offset by a decline in advertising revenues and lower theatrical revenue in the quarter. The company also posted earnings of $1.58 per share, compared to $1.62 per share in the prior year.

Our $114 price estimate for Disney’ stock is more than 10% ahead of the current market price.

ESPN remained a concern for Disney in the third quarter. The company was largely impacted by higher programming expenses at ESPN due to the first year of the new NBA contract, along with lower advertising revenues and ESPN’s falling prime-time viewership. In the fiscal fourth quarter, ESPN’s prime-time viewership remained flat, and the network saw a decline of 3% in total-day viewership. ((ESPN Fares Better Than Many Cable Competitors In Q3, Sports Business Daily, Sep 29 2017)) Going forward, we expect Disney’s Media Networks to decline in the fiscal fourth quarter, driven by continued headwinds amid lower television ratings in the quarter.

In addition, we also expect a fairly weak quarter for the company with respect to its Studio Operations and Consumer Products segment. The studio’s performance was soft in the fourth quarter compared to the prior year period, due to an absence of major film releases in this quarter. Reuters’ compiled analyst estimates forecast revenues of $13.3 billion and earnings of $1.14 per share in the upcoming quarter.

Disney has also announced that it will be increasing its stake in BAMTech, a video streaming company originally created by Major League Baseball, from 33% to 75%, to create an ESPN-branded, over-the-top video streaming service that will cover a variety of sports. It is planning to launch this standalone ESPN streaming app in 2018. In addition, Disney will be removing its content from Netflix‘s (NASDAQ:NFLX) platform following the expiry of the two companies’ deal at the end of 2018, and will launch its own streaming service once the deal expires.

Please refer to our complete analysis for Disney

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