Disney reports with all eyes on Disney+ launch next week
ABC and ESPN parent Disney (DIS) is scheduled to report results of its fourth fiscal quarter after the market close on Thursday, November 7, with a conference call scheduled for 4:30 pm ET. What to watch:
1. DISNEY+: In April of this year the company announced details for its upcoming Disney+ video streaming service at an investor event. The service costs $6.99 per month or $69.99 annually, which is lower than Netflix's (NFLX) basic subscription, and will roll out in the U.S. on November 12.
In a regulatory filing released on Friday, September 13, Apple (AAPL) disclosed that Disney (DIS) CEO Bob Iger had resigned from the board of the iPhone maker. While this news was not earth-shattering, multiple news outlets picked up the same theme explaining the move, leading to headlines like Bloomberg's 'Disney's Iger Quits Apple Board as Streaming Rivalry Heats Up' and Forbes' 'Disney CEO Bob Iger Exits Apple’s Board As Two Companies Prepare To Launch Competing Streaming Services.'
In a September interview with Variety, Netflix CEO Reed Hastings said, "While we've been competing with many people in the last decade, it's a whole new world starting in November...between Apple launching and Disney launching, and of course Amazon's ramping up. It'll be tough competition. Direct-to-consumer will have a lot of choice."
In October, in the company's quarterly earnings letter to investors, Netflix added: "The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compared to linear TV. While the new competitors have some great titles (especially catalog titles), none have the variety, diversity and quality of new original programming that we are producing around the world. The launch of these new services will be noisy. There may be some modest headwind to our near-term growth, and we have tried to factor that into our guidance. In the long-term, though, we expect we'll continue to grow nicely given the strength of our service and the large market opportunity."
On October 22, Verizon (VZ) and Disney announced a "wide-ranging agreement" that will offer all Verizon wireless unlimited customers, new Fios Home Internet and 5G Home Internet customers 12 months of Disney+. On November 6, the official Disney+ Twitter account announced that "Avengers: Endgame" is coming to Disney+ on November 12 in the U.S., Canada, and Netherlands, and on November 19 in Australia and New Zealand. The date change makes "Endgame" a launch title for the service, the Verge has noted.
2. FIVE BILLION DOLLAR FILMS: In July, Disney announced that "The Lion King" would cross the $1B mark in its 19th day of release. At the time, the company noted that the film was Walt Disney Studios' fourth billion dollar release this year, joining "Avengers: Endgame," "Captain Marvel" and the live action remake of "Aladdin." On August 14, Disney announced that Pixar's "Toy Story 4" became The Walt Disney Studios' fifth billion dollar release for 2019. Through that date, the film had earned an estimated $1.0017B worldwide ahead of its planned debuts in Germany and across Scandinavia, Disney noted. The company has two upcoming releases - "Frozen 2" and "Star Wars: The Rise of Skywalker" - that are expected to join the billion dollar club as well.
3. PARKS AND PRODUCTS: In its third fiscal quarter, Disney's Parks, Experiences and Products segment increased 7% to $6.6B and segment operating income increased 4% to $1.7B. "Operating income growth for the quarter was due to increases at our consumer products businesses and Disneyland Paris, partially offset by a decrease at our domestic parks and resorts...The increase at our retail business was due to higher comparable store sales and online revenue," Disney said at the time. In terms of retail news during the quarter, on October 4 Disney and Target (TGT) launched the Disney store at Target in 25 select Target locations and a complementary online experience "to help bring the magic of Disney to the joy of shopping at Target." As part of the collaboration, "guests can now shop from an enhanced Disney assortment of more than 450 items, including more than 100 products that were previously only available at Disney retail locations," the companies stated.
4. CONSENSUS: In terms of overall results for the fourth quarter, analysts are calling for Disney to report total revenue of $19.04B, which would be up from $14.31B a year ago, prior to the company's deal for the businesses acquired from 21st Century Fox. The consensus Q4 EPS forecast stands at 95c, down from $1.12, where it stood 90 days ago.