On February 6th, after hours, the media, entertainment, resorts, and studio giant of the Walt Disney Company announced its 1st Quarter 2018 Earnings. Here is how they fared with EPS and Revenue: Disney reported an adjusted EPS $1.89 EPS beating Wall Street’s expectation of $1.61. For the revenue side, Disney reported $15.35 billion vs an expected $15.45 billion, a slight miss. The recent GOP tax overhaul and other benefits contributed $1.6 billion to the adjusted earnings per share number.
The new ESPN Streaming Service
The most interesting part of the call had to do with its embattled sports network of ESPN, where recently this year, they have been engaged in the political and controversial crosshairs of the NFL kneelers vs the National Anthem “standers”. Disney Chairman and CEO Bob Iger discussed the company’s ESPN Plus, the sports network’s first direct-to-consumer streaming service, that will price at $4.99 per month. Iger mentioned that the service will offer programming that is not available on the current channels. The target audience for this streaming service is for the ultimate sports fan, who will want more coverage than just the regular cable sports channels. In the November 2017 earnings call, Iger mentioned that it would charge less than Netflix for streaming with their recent purchase of Hulu from its Fox acquisition as part of that strategy.
Taking on Netflix
Continuing its strategy to offer more direct to consumer streaming services, CEO Bob Iger discussed the streaming service in 2019 that will directly compete with Netflix, and will be substantially cheaper at $4.99 per month compared to the $12.99 a month. Starting in 2019, Disney will pull its movies and content from Netflix as the new service comes online. Disney already produces its own content with such powerhouse brands of Pixar, Marvel, Star Wars, as well as Disney Channel favorites like Sofia the First and the Mickey Mouse Clubhouse. So, Disney will spend much less for new content. Netflix on the other hand has said it plans to spend up to $8 billion on content in 2018.
The Next Great Marvel Movie: The Black Panther
Disney’s next great movie will be another one from Marvel - The Black Panther, an African super-hero from the fictional African nation of Wakanda. Iger said during the earnings call that ticket presales for this movie are outpacing every other superhero movie ever made. Critics are loving the movie too, as the film has received a 100 percent score on Rotten Tomatoes as reported by Graeme McMillan. The movie will definitely be expected to contribute the Lion’s share of the Studios revenue as reported in April 2018.
As reported by Gabrielle Russan from the Orlando Sentinel, Disney’s domestic theme parks and resorts jumped 6 percent in the first quarter that ended in December that exceeded analysts expectations. The Resorts division generated $5.2 billion in revenue, more than the $4.87 billion expected. From Disney Chief Financial Officer Christine McCarthy, its Pandora World of Avatar at the Animal Kingdom helped bring record attendance to the Parks.
Disney is a great company and a must add to any long term portfolio. Disney pays a dividend yield of 1.58% with the stock trading around $106.