Disney Takes Hit on Earnings Miss

Meanwhile, Disney shares have been taken a tumble this week though, the company posted more than expected subscriber editions in their last quarter, it missed estimates on both revenue and earnings per share. So here to break it all down for us to bring in Senior reporter Michelle Castillo, who's joining me right here in studio. Michelle, good to see you as always. So we know sort of the change has things have changed in terms of how Wall Street assesses these streamers, netflix and others no longer that sort of the subscribers, it's more how much money you're generating out of them. Do you think investors are sort of weary of Disney at this time? You know, that's actually really funny because last quarter Disney was like, don't look at our subscriber numbers, look at our revenue and earnings per share. And with the big miss this year they're expected to earn 50 cents a share. They actually only earned 30 cents on an adjusted basis, missed on revenue by I think about a billion dollars. Um, you're seeing the fact that the investors are doing exactly what Disney told them they're looking and seeing that they're not making as much revenue and you're gonna see other Divisions like the Parks Division, that revenue increased 34% year over year, streaming revenue is up as well. But everything is costing Disney more. So creating content is costing Disney more. Um, this last quarter cost them $1.5 billion 800 million. So everything is doubling in costs, they are increasing, but not at the rate of what it's costing them. And she actually said in a call with investors that this isn't going to slow down in 2023. No, so let's go through some of the numbers. Disney Plus added 12.1 million subscribers. That was above estimates, which is basically about eight million. But you almost see like Disney having the same problem that netflix has where you top out at a particular number, the turn rate changes every month. People are canceling their subscriptions. But then what happens then for the future? How do you sort of base success then here? You know, it's good news for Disney. Let's compare it to netflix this quarter. They only added 2.4 million subscribers. So Disney is winning overall, they are third place when it comes to streaming subscribers. You have netflix amazon prime, which I'll put in there even though a lot of people buy that for the prime membership. And then Disney. So I still think there's room for them to grow on december 8th. They're adding that ad supported tier, which is at the current price of the non ad version of Disney Plus. So that might still keep people in the Disney plus family. But again, to draw people in, they're going to have to pay for more content and a lot of people thought that Mark level and Star Wars would be enough to draw in new viewers, but according to parrot analytics actually interest in Disney originals has declined about 9% year over year. So those two franchises aren't enough just to bring everyone in. They're gonna have to create hits, they're gonna have to create content. I mean, there's good news about and or which is the Star Wars series that's out, but they don't put out as much shows as netflix does as some of their other competitors. So this is something they're going to have to invest in. And that's what I think investors are worry about even though they're still confident that the company can turn Disney plus profitable by 22. Yeah, I don't even think one Disney show crack the top 10 in the Nielsen streaming numbers this last week, so it just kind of shows the sort of headache, Let's go back to the parks because you brought that up because that's obviously supposedly a bright spot for Apec who used to run the parks for Disney, but now they've got shanghai Disney closed since october 31st because of Covid lockdowns. You've got Disney world being affected by tropical storm. Nicole here. Who, I mean, all intensive purposes, it doesn't seem like that's going to be as bad as the storm, but who knows how long that's going to impact profit for revenue for those parks here. And is that going to be happening in the next quarter? Is that going to really hurt them? Well, I think a lot of people think Covid is at least not, may be over, but at least that we've dealt with it. But in a lot of regions in the world, especially china, it's still a very major factor. And you're seeing shutdowns just mentioned shanghai Disney. Um that just reopened on june 30th and it was closed since March. Now it's closed again. They finally got one full quarter basically of of shanghai Disney open, which is why I think you're seeing record profits. Disney is saying that when people do go to the parks, they are spending more on food and merchandise, they are staying longer. They are spending on cruises. But as the winter months increase, we know flu season's here. We know that Covid gets more rampant in the colder months. I think there is a concern that this is really gonna affect the parks division. So while the brights now going forward, they want to build in some seasonality And if this is something for them going forward, think about how much it costs to operate a park. If they can't operate a full year, then it's a big loss for this company. And that's something that they didn't have to deal with even just like five years ago. Yeah, it's such a good point. Let's go to one area that will likely be a bright spot for them and that's going to be theatrical releases because they've got a lot coming up and a big one that is out right now in Black Panther Wakanda forever. Don't forget Of course they also have with the blue avatar. Thank you. That's coming out, which is the highest grossing film ever. But Black Panther Wakanda forever. The first one had $200 billion in its opening box office release. It's going to get anywhere close to that potentially. Probably not to 200 million, but you have to think that's no doubt a bright spot for Disney this weekend. Yeah, I was able to see a screening of it with Dolby Atmos and it was amazing. Um I really highly recommend that everyone watches it. It was a great movie. I think Disney is going to get a huge box office total for this movie. There is one caveat that I kept thinking about this movie is definitely more serious than the original. Black Panther. It deals with Chadwick bozeman's death. Um and it does deal with it in a very, very polite and respectful way, I was very impressed with the way they handled it. However, I question how family friendly this will be for really younger audiences. The first black panther really, you could bring the whole family, this deals with a lot of serious themes of loss and grief. They do it very well but I just wonder if it's still going to have that draw that it did when its original one. I do think we're gonna see more adults go. You're gonna see a lot of people go more than once. It is a very emotional film. It's two hours and 45 minutes. But I do question how you know traditionally the rated R. Movies, this isn't rated R. But the higher rated movies don't do as well in the box office as movies that are more family friendly. So I question that but with avatar coming, I do think that Disney has a good slate of movies coming in. This is good news for them. I think that's gonna go up. It's gonna reinvigorate the marvel franchise which has been a little shaky with some of the movies starting with Black Widow. But also I think in the end of the day we are going to see Disney bringing in the dollars at the box office. This could be also good for companies like AMC which was hit pretty hard with, they had a loss per share again for the second straight quarter. So I think this is going to be good news for the theaters and if it gets anywhere close to 200 million, that would be the best box office performance of the year. Um good to have you here in studio Michele Castelli. Oh thank you so very much