Disney is down pre-market on below consensus Q3 results, missing on revenue and EPS. The miss was driven primarily by disappointing results at theme parks and at the acquired 21st century Fox business (21CF). Almost all of the operating income miss was the result of one-time issues that led to disappointing results at the acquired 21CF film studio and Star (India TV and streaming). They reiterated their expectation for 21CF to be accretive to EPS in FY21. Weak domestic theme park attendance was disappointing given the Star Wars Land launch at Disneyland in Anaheim. Management attributed weak attendance to admission price increases and higher hotel rates in advance of the Star Wars Land opening. Weak attendance at Disney World attributed to people deferring visits until the Star Wars Land attraction opens there later this month. Management seemed confident that these demand issues are temporary. With a slew of changes at Disney including 21CF acquisition, further acquisition of Hulu stake from Comcast, investment behind yet to be launched DTC (including forgone licensing revenue), Disney is in a spending mode ahead of an evolving business model. So it’s not surprising that results are choppy. No change in thesis, more details to come.
Sarah Kanwal
Equity Analyst, Director
Direct: 617.226.0022
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square, Suite 500
Boston, MA 02109
$DIS.US
[tag DIS]