Walt Disney reported its fiscal fourth quarter and full-year 2015 results last week. The beloved entertainment giant posted solid year-over-year quarterly revenue growth of 9%, which essentially met analyst expectations. The force was especially strong with earnings, with GAAP earnings per share rising more than 10% and adjusted EPS soaring 35% in the quarter, comfortably beating estimates.
The purpose here isn't to rehash the results (you can read my earnings take here) but to supplement the earnings release with color from the analyst conference call. Here are four key things you should know about.
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Expanding and leveraging the Star Wars universeFrom CEO Bob Iger's prepared remarks:
Disney is doing with its Star Wars gem, which it acquired when it bought Lucasfilm in 2012, what it does best: leveraging its creative assets across its entire company to drive long-term growth.
Upcoming slate of movies is as strong as a superheroChief Operating Officer Tom Staggs ticked off Disney's film slate for the next year during his opening remarks:
This is an amazing line up for the next year, which should power the studio entertainment segment's results in fiscal year 2016 and beyond.
As to Scaggs' reference to Iger: Iger noted that Star Wars: The Force Awakens opens on December 18 and that Disney will have "three new Star Wars films in theaters between now and the end of 2017 with even more to come." The Force Awakens is the first Star Wars movie in a decade and the first one released since Disney acquired Lucasfilms.
ESPN is mighty enough to be a superheroNot surprisingly, Disney's top management team rattled off numbers illustrating the strength of its sports cable network, ESPN. The full-court press was surely meant to reassure investors, who sent Disney's stock tumbling after Iger's comments on the third quarter conference call. He said that the company expects the modest decline in the number of ESPN subscribers to trim a few percentage points off its previously issued forecast for profit growth from domestic subscriber fees from 2013 to 2016. This decline in subscribers is due to "cord cutting", people cancelling or trimming their large cable packages.
A snippet from one of Scaggs' remarks:
ESPN is the cash-generating machine at the heart of Disney's largest and most profitable segment, media networks. In fiscal 2015, media networks accounted for 44% of total revenue and a whopping 53% of operating income, so there's no denying that the segment and its star player, ESPN, are critical to the company's long-term success. While one quarter is just one quarter, theresults showed no sign of weakness. Disney is cutting costs at ESPN, which will help in the short-term, and it's surely exploring its long-term options. In fact, Iger recently said that the company could offer a stand alone ESPN product in the future.
Look for more direct-to-consumer offeringsIger acknowledged the importance of the traditional multi-channel business model, which involves sending content through distributors. However, several of his comments make it clear that Disney is exploring more direct-to-consumer offerings.
From Iger's answer to an analyst's question:
DisneyLife, which Iger described as essentially an "app experience", represents Disney dipping its toe in the direct-to-consumer distribution sea. It will give subscribers in the UK unprecedented access to a vast universe of Disney content, including hundreds of movies, thousands of TV episodes, as well as music, books, and more.
The article Walt Disney Co Q4 Earnings: 4 Key Things Investors Should Know originally appeared on Fool.com.
Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends 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.
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