Disney's Q3 Earnings Call: Launching an ESPN Streaming Service, the Zika Virus, and Disney Shanghai's Blowout Opening
Walt Disney (NYSE: DIS) reported solid fiscal third-quarter 2016 resultson Aug. 9. The entertainment giant's year-over-year revenue and adjusted earnings per share grew 9% and 12%, respectively. Results were driven by the release of three blockbuster movies in the quarter and by continued strength in domestic parks.
This article's purpose isn't to rehash the results, but to share key information discussed on the company's Q3 analyst conference call. Here are five things you should know.
Image source: Disney.
BAMTech stake and plans to launch a direct-to-consumer ESPN streaming service
From CEO Bob Iger's remarks:
Iger said acquiring the BAMTech stake is a key part of the company's strategy to ensure that ESPN and its other brands remain relevant and strong in a changing TV-viewing market. The leading sports cable network has been steadily losing subscribers because consumers are increasingly dropping or slimming down their large cable bundles due to the availability of subscription video streaming services offered by companies such as Netflix and Amazon.com.
You can read details here about the BAMTech deal and how it will help Disney grow its empire.
A new big "skinny bundle" win
From Iger's remarks:
The partnership with AT&T (NYSE: T), announced on the earnings call, is great news. This deal illustrates Disney's success in getting ESPN and other channels included in the various limited content -- or "skinny bundle" -- over-the-top streaming services that are rolling out.
Zika virus isn't to blame for attendance decline at domestic parks
From CFO Christine McCarthy's remarks:
From Iger's remarks:
The news shared on the call was good to hear since it's likely that some investors have assumed that the Zika virus is keeping people away from Disney World, since Florida is one of several U.S. states that's been most affected. Iger also commented that business from Great Britain consumers at the company's U.S. parks has been "fairly strong," relieving concerns the fallout from Brexit -- the people of Great Britain voting to leave the EU -- could negatively impact planned international "holidays" to Disney's U.S. parks.
Importantly, the impact from lower domestic attendance was more than offset by strong per capita spending, which was up 8% on higher admissions and food and beverage spending.
Shanghai Disney's opening success quantified
From Iger's remarks:
We knew Chinese consumers were eager to rush the gates of Disney's first park in mainland China due to how quickly opening day tickets and hotel rooms were snatched up. The stats Iger shared quantify this enthusiasm.
The massive Chinese park should prove a huge catalyst for growth going forward across Disney's empire. It will be many Chinese consumers' first -- or at least most intimate -- experience with a Disney product. If they have a great experience, they'll be hungry for more of the Mouse's offerings.
Star Wars mania, Take 2
From Iger's remarks about Rogue One, the stand-alone Star Wars movie that's set to be released domestically on Dec. 16:
Iger's news is music to investors' ears, because it's possible to wonder after the phenomenon success of The Force Awakensif consumers will eagerly devour another Star Wars film just a year later. Investors should get a taste of the enthusiasm for Rogue One when Disney reports its fiscal fourth-quarter results, since the initial roll-out of movie-based products begins in the quarter.We know this because Hasbro(NASDAQ: HAS) CEO Brian Goldner said on the toymaker's second-quarter earnings call that the company will begin rolling out its Rogue Onetoys in late September.
Hasbro has been a big beneficiary of Disney's recent success, since it holds the license to produce Star Wars-based toys, and dolls based on the popular Disney Princess and Frozen characters.
A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.
Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com, Hasbro, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.