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In the film about Walt Disney Co.'s spectacular run to become a full-fledged broadcast company, the last quarter was not even the first preview. It was the time when investors were content to butter their popcorn.
On Wednesday, Disney reported revenue and earnings per share higher than analysts' estimates for the quarter prior to March, while cable channel providers and customers of the company's theme parks and resorts spent more money during their stays.
The results have been optimistic, but at the same time they do not do much about the current state of things at Disney. It's because they cover a period that does not include the three events that changed the deal of his year – maybe his life:
• the record release of "Avengers: Endgame" in April,
• openings of its Star Wars destinations: Galaxy's Edge at Disneyland this month and Disney World in August, and
• the upcoming launch of the Disney + streaming app on November 12, the product at the center of CEO Bob Iger's vision for Disney's future.
Even the comments prepared by Iger in the publication of the results did not mention the last quarter and focused on what follows:
We are very pleased with our second quarter results and delighted with the record-breaking success of "Avengers: Endgame", which is now the second most profitable movie of all time and will be broadcast exclusively on Disney + from December 11th.
In less than two weeks of presence of "Avengers: Endgame" in theaters, ticket sales have already exceeded 2.27 billion dollars worldwide. There are only a few hundred million dollars left to make Avatar the biggest movie of all time. It's also the centerpiece of an extraordinary Disney list this year, with "Aladdin" and "Toy Story: 4" that hit the box office in just a few weeks, followed by "The Lion King," Artemis Fowl "and" Maleficent: Mistress of Evil. "Next," Frozen 2 "and" Star Wars: The Ascension of Skywalker "will take fans through the holiday season.
It was such a feat that I wondered if Disney was setting a bar that she could not reach, or at least not long ago. The company announced this week that the release of "Avatar 2" – a franchise it now holds through the acquisition of 21st Century Fox's film assets – was postponed until the end of 2021. And after "The Rise of Skywalker ", its next The movie" Star Wars "is only in December 2022. Apart from the dense schedule of blockbusters, Disney also offers all his new movies on Disney + instead of licensing them to Netflix Inc. and others.
This is just one example: Disney's ongoing streaming gamble will hurt other revenues in the coming years, and Disney + will only be able to make up for deficits when its subscriber numbers reach its peak. will be profitable. According to the company's own predictions, Disney + will only start making money in 2024. Last quarter, the new direct-to-consumer and international division lost $ 393 million, reflecting the investment cost in Disney + and ESPN +, so bleeding money. (1)
In addition to the effects of Disney's mutation on its financial results, there is also a potential impact on culture and morale. Companies that have long been at the heart of Disney could instead start functioning more like veins providing content and resources to the new heart of society: digital video applications. While the Disney team is looking into this new process, it is also working to integrate assets and employees from its $ 85-billion Fox contract, signed in March. (Fox Corp. released its own results after the close of trading on Wednesday, a leaner company dedicated for the first time to focusing entirely on information and sports. (2))
The last period of Disney was good, but relatively insignificant given all the changes in progress. But take your seats because the presentation of the features will start soon.
(1) Disney owns most of Hulu and is in talks to buy back the remaining stake in Comcast Corp., an agreement that may not be concluded quickly or easily, but is a key step in Iger's strategy.
(2) The strength of Fox News has allowed analysts to get results out of the water, demonstrating why the Murdochs saw value in a break that would put the spotlight on their news channel.
To contact the author of this story: Tara Lachapelle at [email protected]
To contact the editor responsible for this story: Beth Williams at [email protected]
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tara Lachapelle is a columnist for Bloomberg Opinion in charge of the markets, Berkshire Hathaway Inc., media and telecommunications. Previously, she had written a column on mergers and acquisitions for Bloomberg News.
© 2019 Bloomberg L.P.
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