disney research report

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Disney (DIS)

(delayed data from nyse).

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Updated Aug 12, 2024 04:00 PM ET

After-Market: $85.95 0.00 (0.00%) 7:58 PM ET

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• Walt Disney-stock
• News for Walt Disney

Positive Outlook for Walt Disney Stock, Backed by ESPN’s Growth Prospects and Robust Returns from Parks & Experiences Segment

Walt Disney ( DIS – Research Report ), the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Benjamin Swinburne from Morgan Stanley remains neutral on the stock and has a $105.00 price target.

Benjamin Swinburne’s Buy rating for Walt Disney’s stock is primarily driven by a couple of key considerations. Firstly, the revealing of ESPN’s financials for the first time has sparked optimism about the potential growth prospects for ESPN, particularly as it transitions to a direct-to-consumer model.

Secondly, the Parks & Experiences segment of Disney, which is a significant contributor to their FY23 earnings, is seen as a valuable asset. This segment consistently delivers robust returns above 20% and has shown high single-digit operating income growth over the past decade. Additionally, Disney’s Media business, despite currently underperforming and undervalued, is seen as offering potential upside due to its trading at less than one times sales.

Moreover, ESPN’s performance has been more stable than anticipated and there are ambitions to grow this business over time, despite challenges such as cord-cutting trends and escalating sports rights costs. This stability and potential growth could significantly benefit Disney shares, especially as the overall Media assets are currently underperforming and undervalued.

Finally, Disney’s US general entertainment networks, while currently on a decline, are larger and more profitable than previously thought. This, coupled with the potential valuation of ESPN in the range of $25-35 billion, adds further weight to Swinburne’s Buy rating for Walt Disney’s stock.

In another report released on October 16, UBS also maintained a Buy rating on the stock with a $110.00 price target.

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Walt Disney (DIS) Company Description:

The Walt Disney Co. is a diversified entertainment and media enterprise. It operates through the following segments: Media Networks, Parks, Experiences and Products, Studio Entertainment and Direct-to-Consumer & International (DTCI). The company owns domestic cable networks like Disney, ESPN, Freeform and National Geographic, is involved in the production and distribution of television and motion picture content, operates theme parks, resorts, cruise lines and also offers streaming services. Founded by Walter Elias Disney on October 16, 1923, the company is headquartered in Burbank, CA.

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The Walt Disney Company (DIS)

The Walt Disney Company operates as an entertainment company worldwide. It operates through three segments: Entertainment, Sports, and Experiences. The company produces and distributes film and television video streaming content under the ABC Television Network, Disney, Freeform, FX, Fox, National Geographic, and Star brand television channels, as well as ABC television stations and A+E television networks; and produces original content under the ABC Signature, Disney Branded Television, FX Productions, Lucasfilm, Marvel, National Geographic St... [Read more]

Financial Performance

In 2023, Disney's revenue was $88.90 billion, an increase of 7.47% compared to the previous year's $82.72 billion. Earnings were $2.35 billion, a decrease of -25.15%.

Analyst Forecast

According to 25 analysts, the average rating for DIS stock is "Strong Buy." The 12-month stock price forecast is $118.21, which is an increase of 37.53% from the latest price.

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Disneyland and Disney World expansion plans: Every new theme park attraction just announced

Earlier this year the Walt Disney Company unveiled a map that detailed plans to expand its Disneyland theme park in Anaheim, California. The expansion will allow for all new themed lands at the park.

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Walt Disney (DIS) New Attractions, Cisco (CSCO) Layoffs

Caroline Woods profiles early movers in Monday's session, including Cisco (CSCO) after announcing more job cuts. Then, she looks at Walt Disney (DIS) following expansion plans for its theme parks busi...

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Disney stock currently trades at $86 per share, about 57% below its pre-inflation shock high of about $200 seen on March 8, 2021. The sell-off has been driven by several factors.

Seaport: Disney's stock will be flat over next few quarters until there's an inflection point

David Joyce, Senior Analyst at Seaport Research Partners, discusses the outlook for Disney following its D23 event.

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Continuing a legacy of innovation

Disney Research combines the best of academia and industry, by doing fundamental and application-driven research. We publish our work and actively engage with the global research community. Our research applications and technology are experienced by millions of people. We honor Walt Disney’s legacy by deploying our innovations on a global scale.

Our Research Areas

Artificial intelligence & machine learning, immersive technologies, recent publications.

Design and Control of a Bipedal Robotic Character

Soft Pneumatic Actuator Design using Differentiable Simulation

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Top research reports for walt disney, charles schwab & synopsys.

Tuesday, May 28, 2024 The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including The Walt Disney Company (DIS), The Charles Schwab Corporation (SCHW) and Synopsys, Inc. (SNPS), as well as a micro-cap stocks HF Foods Group Inc. (HFFG).  The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country. These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>> Shares of Walt Disney have outperformed the Zacks Media Conglomerates industry over the past year (+15.6% vs. +10.1%). The company’s second-quarter fiscal 2024 results reflect growth in Disney+ subscribers and theme park and resort businesses. Attractions like the Frozen theme land at Hong Kong Disneyland and the Zootopia theme land at Shanghai Disney, are expected to boost the prospects of the theme park business in th near term. Disney’s declining ad revenues due to fewer impressions has been a headwind for some time now. Disney+’s profitability is expected to be negatively impacted by higher investments in content, which will increase programming and production costs for Media and Entertainment Distribution. Its leveraged balance sheet remains a concern. Disney+ is facing tough competition in the streaming market from the likes of Netflix and Amazon Prime Video. (You can read the full research report on Walt Disney here >>> ) Shares of Charles Schwab have gained +22.1% over the past six months against the Zacks Financial - Investment Bank industry’s gain of +32.3%. The company’s first-quarter 2024 results were aided by robust asset management performance. Acquisitions, which are earnings accretive, have reinforced Schwab’s position as a leading brokerage player. Amid high interest rates, margins will likely grow, but rising funding costs might weigh on it. As the company keeps investing to bolster business efficiency, operating costs will be elevated. Buyouts and rising compensation costs will also result in higher costs. Its trading revenues will be under pressure amid uncertain market conditions. (You can read the full research report on Charles Schwab here >>> ) Synopsys’ shares have outperformed the Zacks Computer - Software industry over the year-to-date period (+14.1% vs. +10.8%). The company is benefiting from solid design wins due to a robust product portfolio. Growth in the hybrid working trend is driving demand for bandwidth. Strong traction for Synopsys’ Fusion Compiler product is boosting its top line. The growing demand for advanced technology, design, IP and security solutions is also creating solid prospects. The rising impact of artificial intelligence, 5G, the Internet of Things and big data is driving investments in new compute and machine learning architectures. However, tightening corporate budget amid ongoing macroeconomic challenges, along with unfavorable currency exchange rates and stiff competition, might hurt its near-term growth prospects. Geopolitical challenges and restrictions over trade with Huawei are other woes. (You can read the full research report on Synopsys here >>> ) Shares of HF Foods have underperformed the Zacks Food - Miscellaneous industry over the past year (-8.3% vs. -3.9%). This microcap company with market capitalization of $176.25 million is facing challenges which includes high debt levels, low net profit margins, declining cash flow, and inventory management issues. Dependence on the Asian restaurant market, exposure to interest rate fluctuations, and geopolitical risks pose concerns. The impact of exiting the chicken processing business and the risks associated with transformation initiatives persist. Nevertheless, HF Foods’ revenues increased 0.6% year over year in first-quarter 2024 despite exiting its chicken processing business in 2023. Profitability improved significantly, with net loss narrowing and adjusted EBITDA increasing. Cost control measures, such as centralized purchasing, fleet enhancements, and digital transformation, are driving efficiencies. With a strong liquidity position, HF Foods is well-positioned for strategic mergers and acquisitions (M&A) to expand its footprint. (You can read the full research report on HF Foods here >>> ) Other noteworthy reports we are featuring today include Waste Management, Inc. (WM), Northrop Grumman Corporation (NOC) and PulteGroup, Inc. (PHM). Mark Vickery Senior Editor Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Disney (DIS) Banks on Disney+, Theme Parks Business Growth

Strategic Acquisitions Aid Schwab (SCHW) Amid Cost Concerns

Synopsys (SNPS) Banks on Strong Product Menu, Contract Wins

Featured Reports

Focused Differentiation Aids Waste Management (WM), Cost High Per the Zacks analyst, differentiation through capitalization of extensive assets ensures long-term profitable growth for Waste Management. Rising finance costs is a concern.

Solid Demand Aids Northrop (NOC), Supply Chain Turmoil Woes Per the Zacks analyst, strong global demand for its products like Triton and E-2D Advanced Hawkeyes steadily boosts Northrop. Yet COVID-19 induced supply chain disruption might hurt the stock.

Strong Product Portfolio Buoys Optimism for Baxter (BAX) Per the Zacks analysts, Baxter International is well poised for growth backed by a strong product portfolio. Introduction of new therapies and products likely to drive the topline growth.

Ovintiv (OVV) to Gain from Premium Asset Portfolio The Zacks analyst likes Ovintiv's premium inventory of drilled uncompleted wells that can be quickly brought into production. However, the company's low current ratio signals financial difficulties.

Dr. Reddy's (RDY) Generic Drugs Boost Sales, Competition a Woe Per the Zacks analyst, Dr. Reddy's enjoys a strong foothold in the generics market with new product launches and pending filings. However intense competition with other generics manufacturers is a woe

Ralph Lauren's (RL) Next Great Chapter Plan Seems Encouraging Per Zacks analyst, Ralph Lauren's Next Great Chapter Plan appears encouraging. This includes creating a simplified global organizational structure and rolling out improved technological capabilities.

Diversified Portfolio Aids Blue Owl Capital (OBDC), Costs Hurt Per the Zacks analyst, Blue Owl Capital's revenues are driven by higher investment income, and a diversified portfolio safeguards it against tough times. Rising expenses are a concern.

New Upgrades

Solid Housing Demand & Strategic Plans Aid PulteGroup (PHM) Per the Zacks analyst, PulteGroup is benefiting from favorable housing demand along with a lower cancellation rate. Also, its focus on first-time buyers and strategic initiatives bode well.

Goodyear Forward & EMEA Restructuring to Aid Goodyear (GT) The Zacks analyst believes that the Goodyear Forward plan will enhance the company's portfolio and margins, and reduce leverage. Strategic restructuring in the EMEA segment also bodes well.

BlackBerry (BB) Gains from Strengthening Cybersecurity Unit Per the Zacks analyst, momentum in the Cybersecurity unit along with rapid adoption of the QNX platform in the Automotive and General Embedded markets are likely to boost BlackBerry's performance.

New Downgrades

Escalating Expenses and Competition Hurt Avis Budget (CAR) Per the Zacks analyst, increasing expenses due to fleet cost is a major headwind to Avis Budget's bottom-line. Rising competition from other players is an overhang.

Weakness Across Both Business Segments Ails Lumen (LUMN) Per the Zacks analyst, weakness in across both the business segments is affecting Lumen. Impact of divestitures, CDN and commercial agreements amid the business transformation process are headwinds.

Weak End-Market Demand Hurts Skyworks' (SWKS) Prospects Per the Zacks analyst, Skyworks is suffering from sluggish demand in the mobile end-market demand. Weakness in infrastructure and automotive end markets hurts broad market growth.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

The Charles Schwab Corporation (SCHW) : Free Stock Analysis Report

Waste Management, Inc. (WM) : Free Stock Analysis Report

PulteGroup, Inc. (PHM) : Free Stock Analysis Report

The Walt Disney Company (DIS) : Free Stock Analysis Report

Synopsys, Inc. (SNPS) : Free Stock Analysis Report

HF FOODS GROUP INC. (HFFG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The Walt Disney Company Reports Fourth Quarter and Full Year Earnings for Fiscal 2022

BURBANK, Calif.–The Walt Disney Company (NYSE: DIS) today reported earnings for its fourth quarter and fiscal year ended October 1, 2022.

• Revenues for the quarter and year grew 9% and 23%, respectively.
• Diluted earnings per share (EPS) from continuing operations for the quarter was comparable to the prior-year quarter at $0.09. Excluding certain items (1) , diluted EPS for the quarter decreased to $0.30 from $0.37 in the prior-year quarter.
• Diluted EPS from continuing operations for the fiscal year ended October 1, 2022 increased to $1.75 from $1.11 in the prior year. Excluding certain items (1) , diluted EPS for the year increased to $3.53 from $2.29 in the prior year.

“2022 was a strong year for Disney, with some of our best storytelling yet, record results at our Parks, Experiences and Products segment, and outstanding subscriber growth at our direct-to-consumer services, which added nearly 57 million subscriptions this year for a total of more than 235 million,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “Our fourth quarter saw strong subscription growth with the addition of 14.6 million total subscriptions, including 12.1 million Disney+ subscribers. The rapid growth of Disney+ in just three years since launch is a direct result of our strategic decision to invest heavily in creating incredible content and rolling out the service internationally, and we expect our DTC operating losses to narrow going forward and that Disney+ will still achieve profitability in fiscal 2024, assuming we do not see a meaningful shift in the economic climate. By realigning our costs and realizing the benefits of price increases and our Disney+ ad-supported tier coming December 8, we believe we will be on the path to achieve a profitable streaming business that will drive continued growth and generate shareholder value long into the future. And as we embark on Disney’s second century in 2023, I am filled with optimism that this iconic company’s best days still lie ahead.” (2)

The following table summarizes the fourth quarter and full year results for fiscal 2022 and 2021:

SEGMENT RESULTS

The Company evaluates the performance of its operating segments based on segment operating income, and management uses total segment operating income as a measure of the performance of operating businesses separate from non-operating factors. The Company believes that information about total segment operating income assists investors by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect net income, thus providing separate insight into both operations and other factors that affect reported results.

The following are reconciliations of income from continuing operations before income taxes to total segment operating income and revenues to segment revenues (in millions):

The following table summarizes the fourth quarter and full year segment revenue and segment operating income for fiscal 2022 and 2021 (in millions):

DISCUSSION OF FULL YEAR SEGMENT RESULTS

Total segment operating income increased 56%, or $4.4 billion, to $12.1 billion, due to higher operating income at Disney Parks, Experiences and Products, partially offset by lower operating income at Disney Media and Entertainment Distribution. Results at Disney Parks, Experiences and Products in the current year reflected the benefit from the comparison to the closures/reduced operating capacity in the prior year as a result of the novel coronavirus (COVID-19). The decrease at Disney Media and Entertainment Distribution was due to lower operating results at Direct-to-Consumer and Content Sales/ Licensing, partially offset by growth at Linear Networks. The decrease at Direct-to-Consumer was due to higher losses at Disney+ and, to a lesser extent, lower results at Hulu and higher losses at ESPN+. Lower results at Content Sales/Licensing were due to a decrease in TV/SVOD distribution results, higher film cost impairments and decreases in home entertainment and theatrical distribution results, partially offset by an increase at our stage play business, as productions were generally shut down in the prior year due to COVID-19. Growth at Linear Networks reflected higher domestic Broadcasting and Cable results, partially offset by lower results internationally.

DISCUSSION OF FOURTH QUARTER SEGMENT RESULTS

Disney Media and Entertainment Distribution

Revenue and operating results for the Disney Media and Entertainment Distribution segment are as follows (in millions):

Linear Networks

Linear Networks revenues for the quarter decreased 5% to $6.3 billion, and operating income increased 6% to $1.7 billion. The following table provides further detail of Linear Networks results (in millions):

Domestic Channels

Domestic Channels revenues for the quarter decreased 2% to $5.3 billion, and operating income increased 6% to $1.5 billion. The increase in operating income reflected higher results at Cable and a modest increase at Broadcasting.

The increase at Cable was due to lower programming and production costs, partially offset by a decrease in advertising revenue. The decrease in programming and production costs was due to lower costs for sports programming and, to a lesser extent, a lower cost mix of non-sports programming. The decrease in sports programming costs was due to lower NBA and MLB rights costs, partially offset by higher NFL rights costs as a result of airing one additional game in the current quarter. Lower NBA rights costs reflected the timing of the NBA Finals, which aired in the third quarter of the current fiscal year compared to the fourth quarter of the prior year, as a result of a delayed start of the 2021 NBA season due to COVID-19. The decrease in costs for MLB programming was due to airing 16 games in the current quarter under our new contract compared to 45 games in the prior-year quarter. Lower advertising revenue was due to a decrease in rates and fewer impressions reflecting a decline in average viewership and fewer units delivered. The decrease in rates and impressions were impacted by the timing of the 2021 NBA Finals. Affiliate revenue was comparable to the prior-year quarter as a decline in subscribers was essentially offset by higher contractual rates.

Broadcasting grew modestly compared to the prior-year quarter as growth at the owned television stations from higher advertising and affiliate revenue was partially offset by lower results at ABC. The decrease at ABC was due to higher programming and production costs, partially offset by growth in affiliate and, to a lesser extent, advertising revenue.

International Channels

International Channels revenues for the quarter decreased 18% to $1.1 billion and operating income decreased 18% to $0.1 billion, reflecting lower operating income from channels that operated for the entire current and prior-year quarters (ongoing channels), partially offset by a benefit from channel closures.

Lower results from ongoing channels were primarily due to a decrease in advertising revenue and, to a lesser extent, higher marketing spend and an unfavorable foreign exchange impact, partially offset by lower sports programming costs. The decrease in advertising revenue was due to lower average viewership, partially offset by higher rates. The decreases in sports programming costs and average viewership were due to the non-comparability of cricket events reflecting the impact of COVID-19-related timing shifts. The most significant impact was on the timing of Indian Premier League cricket matches, as there were no matches in the current quarter compared to 18 matches in the prior-year quarter.

Equity in the Income of Investees

Income from equity investees increased $35 million, to $147 million from $112 million, driven by impairments of certain equity investments in the prior-year quarter.

Direct-to-Consumer

Direct-to-Consumer revenues for the quarter increased 8% to $4.9 billion and operating loss increased $0.8 billion to $1.5 billion. The increase in operating loss was due to a higher loss at Disney+ and a decrease in results at Hulu, partially offset by improved results at ESPN+.

Results at Disney+ reflected higher programming and production costs, increases in marketing and technology costs and the absence of Premier Access releases in the current quarter, partially offset by higher subscription revenue. In the current quarter, there were no Premier Access releases whereas the prior-year quarter reflected the releases of Black Widow and Jungle Cruise . The increase in programming and production costs was driven by more content provided on the service and higher average costs, which included an increased mix of original content. Higher subscription revenue was due to subscriber growth and, to a lesser extent, increases in retail pricing, partially offset by an unfavorable foreign exchange impact.

The decrease in results at Hulu was due to higher programming and production and marketing costs, partially offset by subscription revenue growth. The increase in programming and production costs was due to more content provided on the service and an increase in subscriber-based fees for programming the Live TV service. Higher subscriber-based fees for programming the Live TV service were due to rate increases and more subscribers. Subscription revenue growth was due to increases in subscribers and in retail pricing.

The improvement at ESPN+ was primarily due to an increase in subscription revenue due to subscriber growth, partially offset by a decrease in income from Ultimate Fighting Championship pay-per-view events due to lower average buys per event.

The following tables present additional information about our Disney+, ESPN+ and Hulu DTC product offerings (1) .

Paid subscribers (1) as of:

Average Monthly Revenue Per Paid Subscriber (1) for the quarter ended:

The average monthly revenue per paid subscriber for domestic Disney+ decreased from $6.81 to $6.10 due to a higher mix of subscribers to multi-product offerings, partially offset by an increase in retail pricing.

The average monthly revenue per paid subscriber for international Disney+ (excluding Disney+ Hotstar) increased from $5.62 to $5.83 due to increases in retail pricing, partially offset by an unfavorable foreign exchange impact.

The average monthly revenue per paid subscriber for Disney+ Hotstar decreased from $0.64 to $0.58 due to lower per-subscriber advertising revenue and a higher mix of wholesale subscribers, partially offset by an increase in retail pricing.

The average monthly revenue per paid subscriber for ESPN+ increased from $4.74 to $4.84 driven by a lower mix of annual subscribers, an increase in retail pricing and, to a lesser extent, higher per-subscriber advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.

The average monthly revenue per paid subscriber for the Hulu SVOD Only service decreased from $12.75 to $12.23 primarily due to lower per-subscriber advertising revenue, a higher mix of subscribers to multi-product offerings as well as to promotional offerings, partially offset by an increase in retail pricing.

The average monthly revenue per paid subscriber for the Hulu Live TV + SVOD service increased from $84.89 to $86.77 due to an increase in retail pricing and higher per-subscriber advertising revenue, partially offset by a higher mix of subscribers to multi-product offerings.

Content Sales/Licensing and Other

Content Sales/Licensing and Other revenues for the quarter decreased 15% to $1.7 billion and segment operating results decreased from a loss of $65 million to a loss of $178 million. The decrease in operating results was due to lower TV/SVOD and home entertainment distribution results, partially offset by higher theatrical distribution results and an increase at our stage play business, as stage play productions were generally shut down in the prior-year quarter due to COVID-19.

The decrease in TV/SVOD distribution results was due to lower sales volumes of film and episodic content in the current quarter and current quarter impairments of episodic content produced for third-party networks. Lower sales volumes included the impact of the shift from licensing our content to third parties to distributing it on our DTC services.

The decrease in home entertainment results was due to lower unit sales and a decrease in average net effective pricing of catalog and new release titles. The decrease in unit sales of new release titles was due to fewer titles available for release in the current quarter

The increase in theatrical distribution results reflected the performance of Thor: Love and Thunder in the current quarter, compared to titles released in the prior-year quarter, which included Black Widow, Free Guy, Shang-Chi and the Legend of the Ten Rings and Jungle Cruise .

Disney Parks, Experiences and Products

Disney Parks, Experiences and Products revenues for the quarter increased to $7.4 billion compared to $5.5 billion in the prior-year quarter. Segment operating income increased $0.9 billion to $1.5 billion compared to $0.6 billion in the prior-year quarter. Higher operating results for the quarter reflected increases at our domestic and international parks and experiences businesses and, to a lesser extent, our merchandise licensing business.

Operating income growth at our domestic parks and experiences was due to higher volumes and increased guest spending, partially offset by cost inflation, higher operations support costs and costs for new guest offerings. Higher volumes were due to increases in attendance, cruise ship sailings, which included a benefit from the July 2022 launch of the Disney Wish , and occupied room nights. Cruise ships were operating during the entire current quarter while sailings resumed during the prior-year quarter and operated at reduced capacities. Guest spending growth was due to an increase in average per capita ticket revenue driven by the introduction of Genie+ and Lightning Lane in the first quarter of the current fiscal year.

Improved results at our international parks and resorts were due to growth at Disneyland Paris, partially offset by a decrease at Shanghai Disney Resort. Higher operating results at Disneyland Paris were due to an increase in volumes and higher average ticket prices, partially offset by higher operations support costs. Higher volumes were due to increases in attendance and occupied room nights. The decrease at Shanghai Disney Resort was due to lower average ticket prices driven by a higher mix of annual passholder attendees in the current quarter as a result of COVID-19-related travel restrictions.

Growth at our merchandise licensing business was primarily due to higher sales of merchandise based on Mickey and Friends, Encanto and Toy Story.

The following table presents supplemental revenue and operating income (loss) detail for the Disney Parks, Experiences and Products segment:

COVID-19 PANDEMIC

Since early 2020, the world has been, and continues to be, impacted by COVID-19 and its variants. COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at the Disney Parks, Experiences and Products segment where our theme parks and resorts were closed and cruise ship sailings and guided tours were suspended. In addition, at DMED we delayed, or in some cases, shortened or cancelled theatrical releases and experienced disruptions in the production and availability of content. Operations resumed at various points since May 2020, with certain theme park and resort operations and film and television productions resuming by the end of fiscal 2020 and throughout fiscal 2021. Although operations resumed, many of our businesses continue to experience impacts from COVID-19, such as incremental health and safety measures and related increased expenses, capacity restrictions and closures (including at some of our international parks and in theaters in certain markets), and disruption of production activities.

OTHER FINANCIAL INFORMATION

Corporate and Unallocated Shared Expenses

Corporate and unallocated shared expenses increased $51 million for the quarter, from $283 million to $334 million, driven by higher human resource-related costs.

Restructuring and Impairment Charges

During the prior-year quarter, the Company recorded $92 million of charges for asset impairments, pension settlements and severance primarily at our parks and experience businesses.

Other Income (Expense), net

In the current quarter, the Company recorded a $63 million non-cash gain to adjust its investment in DraftKings, Inc. (DraftKings) to fair value (DraftKings gain (loss)). In the prior-year quarter, the Company recorded a $13 million DraftKings loss.

Interest Expense, net

Interest expense, net was as follows (in millions):

The increase in interest expense was primarily due to higher average rates, partially offset by lower average debt balances.

The increase in interest income, investment income and other was due to a favorable comparison of pension and postretirement benefit costs, other than service cost, which was a net benefit in the current quarter and an expense in the prior-year quarter.

Equity in the income of investees was as follows (in millions):

Income Taxes

The effective income tax rate was as follows:

The effective income tax rate in the current quarter was higher than the U.S. statutory rate due to higher effective tax rates on foreign earnings, partially offset by favorable adjustments related to prior years. The effective income tax rate in the prior-year quarter was lower than the U.S. statutory rate due to favorable adjustments related to prior years, partially offset by higher effective tax rates on foreign earnings. Higher effective tax rates on foreign earnings in both the current and prior-year quarters reflected the impact of foreign losses and, to a lesser extent, foreign tax credits for which we were unable to recognize a tax benefit.

Noncontrolling Interests

Net income attributable to noncontrolling interests was as follows (in millions):

The decrease in net income from continuing operations attributable to noncontrolling interests was primarily due to higher losses at Shanghai Disney Resort, partially offset by higher results at ESPN.

Net income attributable to noncontrolling interests is determined on income after royalties and management fees, financing costs and income taxes, as applicable.

FULL YEAR CASH FLOW STATEMENT INFORMATION

Cash provided by operations and free cash flow were as follows (in millions):

Cash provided by operations for fiscal 2022 increased by $0.4 billion from $5.6 billion in the prior year to $6.0 billion in the current year. The increase was due to higher operating income and, to a lesser extent, lower tax payments and pension contributions. These increases were partially offset by the comparison to a net working capital benefit in the prior year, which reflected the resumption of our businesses following COVID-19-related shutdowns, higher net spending for film and television content and, to a lesser extent, a partial payment for the Content License Early Termination in fiscal 2022.

Capital Expenditures and Depreciation Expense

Investments in parks, resorts and other property were as follows (in millions):

Capital expenditures increased from $3.6 billion to $4.9 billion primarily due to higher spending at Disney Parks, Experiences and Products on cruise ship fleet expansion. The increase also reflected higher spending on corporate facilities.

Depreciation expense was as follows (in millions):

DTC PRODUCT DESCRIPTIONS AND KEY DEFINITIONS

Product offerings

In the U.S., Disney+, ESPN+ and Hulu SVOD Only are each offered as a standalone service or as a package that includes all three services (the SVOD Bundle). Effective December 21, 2021, Hulu Live TV + SVOD includes Disney+ and ESPN+ (the new Hulu Live TV + SVOD offering), whereas previously, Hulu Live TV + SVOD was offered as a standalone service or with Disney+ and ESPN+ as optional additions (the old Hulu Live TV + SVOD offering). Effective March 15, 2022, Hulu SVOD Only is also offered with Disney+ as an optional add-on. Disney+ is available in more than 150 countries and territories outside the U.S. and Canada. In India and certain other Southeast Asian countries, the service is branded Disney+ Hotstar. In certain Latin American countries, we offer Disney+ as well as Star+, a general entertainment SVOD service, which is available on a standalone basis or together with Disney+ (Combo+). Depending on the market, our services can be purchased on our websites, through third-party platforms/apps or via wholesale arrangements.

Paid subscribers

Paid subscribers reflect subscribers for which we recognized subscription revenue. Subscribers cease to be a paid subscriber as of their effective cancellation date or as a result of a failed payment method. Subscribers to the SVOD Bundle are counted as a paid subscriber for each service included in the SVOD Bundle and subscribers to the Hulu Live TV + SVOD offerings are counted as one paid subscriber for each of the Hulu Live TV + SVOD, Disney+ and ESPN+ offerings. A Hulu SVOD Only subscriber that adds Disney+ is counted as one paid subscriber for each of the Hulu SVOD Only and Disney+ offerings. In Latin America, if a subscriber has either the standalone Disney+ or Star+ service or subscribes to Combo+, the subscriber is counted as one Disney+ paid subscriber. Subscribers include those who receive a service through wholesale arrangements including those for which we receive a fee for the distribution of the service to each subscriber of an existing content distribution tier. When we aggregate the total number of paid subscribers across our DTC streaming services, we refer to them as paid subscriptions.

International Disney+ (excluding Disney+ Hotstar)

International Disney+ (excluding Disney+ Hotstar) includes the Disney+ service outside the U.S. and Canada and the Star+ service in Latin America.

Average Monthly Revenue Per Paid Subscriber

Average monthly revenue per paid subscriber is calculated based on the average of the monthly average paid subscribers for each month in the period. The monthly average paid subscribers is calculated as the sum of the beginning of the month and end of the month paid subscriber count, divided by two. Disney+ average monthly revenue per paid subscriber is calculated using a daily average of paid subscribers for the period. Revenue includes subscription fees, advertising (excluding revenue earned from selling advertising spots to other Company businesses) and premium and feature add-on revenue but excludes Premier Access and Pay-Per-View revenue. The average revenue per paid subscriber is net of discounts on offerings that carry more than one service. Revenue is allocated to each service based on the relative retail price of each service on a standalone basis. Revenue for the new Hulu Live TV + SVOD offering is allocated to the SVOD services based on the wholesale price of the SVOD Bundle. In general, wholesale arrangements have a lower average monthly revenue per paid subscriber than subscribers that we acquire directly or through third-party platforms.

NON-GAAP FINANCIAL MEASURES

This earnings release presents free cash flow, diluted EPS excluding certain items, and total segment operating income, all of which are important financial measures for the Company, but are not financial measures defined by GAAP.

These measures should be reviewed in conjunction with the most comparable GAAP financial measures and are not presented as alternative measures of cash provided by continuing operations, diluted EPS or income from continuing operations before income taxes as determined in accordance with GAAP. Free cash flow, diluted EPS excluding certain items and total segment operating income as we have calculated them may not be comparable to similarly titled measures reported by other companies. See further discussion of total segment operating income on page 2.

Free cash flow

The Company uses free cash flow (cash provided by continuing operations less investments in parks, resorts and other property), among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures. Management believes that information about free cash flow provides investors with an important perspective on the cash available to service debt obligations, make strategic acquisitions and investments and pay dividends or repurchase shares.

The following table presents a summary of the Company’s consolidated cash flows (in millions):

The following table presents a reconciliation of the Company’s consolidated cash provided by operations to free cash flow (in millions):

Diluted EPS excluding certain items

The Company uses diluted EPS excluding (1) certain items affecting comparability of results from period to period and (2) amortization of TFCF and Hulu intangible assets, including purchase accounting step-up adjustments for released content, to facilitate the evaluation of the performance of the Company’s operations exclusive of these items, and these adjustments reflect how senior management is evaluating segment performance.

The Company believes that providing diluted EPS exclusive of certain items impacting comparability is useful to investors, particularly where the impact of the excluded items is significant in relation to reported earnings and because the measure allows for comparability between periods of the operating performance of the Company’s business and allows investors to evaluate the impact of these items separately.

The Company further believes that providing diluted EPS exclusive of amortization of TFCF and Hulu intangible assets associated with the acquisition in 2019 is useful to investors because the TFCF and Hulu acquisition was considerably larger than the Company’s historic acquisitions with a significantly greater acquisition accounting impact.

The following table reconciles reported diluted EPS from continuing operations to diluted EPS excluding certain items for the fourth quarter:

The following table reconciles reported diluted EPS from continuing operations to diluted EPS excluding certain items for the year:

CONFERENCE CALL INFORMATION

In conjunction with this release, The Walt Disney Company will host a conference call today, November 8, 2022, at 4:30 PM EST/1:30 PM PST via a live Webcast. To access the Webcast go to www.disney.com/investors . The discussion will be archived.

FORWARD-LOOKING STATEMENTS

Certain statements and information in this earnings release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future performance and growth; and the future impact of COVID-19 on our businesses and other statements that are not historical in nature. These statements are made on the basis of management’s views and assumptions regarding future events and business performance as of the time the statements are made. Management does not undertake any obligation to update these statements.

Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company, including restructuring or strategic initiatives (including capital investments, asset acquisitions or dispositions, new or expanded business lines or cessation of certain operations), our execution of our business plans (including the content we create and IP we invest in, our pricing decisions and our cost structure) or other business decisions, as well as from developments beyond the Company’s control, including:

• further deterioration in domestic and global economic conditions;
• deterioration in or pressures from competitive conditions, including competition to create or acquire content;
• consumer preferences and acceptance of our content, offerings, pricing model and price increases and the market for advertising sales on our DTC services and linear networks;
• health concerns and their impact on our businesses and productions;
• international, regulatory, legal, political, or military developments;
• technological developments;
• labor markets and activities;
• adverse weather conditions or natural disasters; and
• availability of content;

each such risk includes the current and future impacts of, and is amplified by, COVID-19 and related mitigation efforts.

Such developments may further affect entertainment, travel and leisure businesses generally and may, among other things, affect (or further affect, as applicable):

• our operations, business plans or profitability;
• demand for our products and services;
• the performance of the Company’s content;
• our ability to create or obtain desirable content at or under the value we assign the content;
• the advertising market for programming;
• income tax expense; and
• performance of some or all Company businesses either directly or through their impact on those who distribute our products.

Additional factors are set forth in the Company’s Annual Report on Form 10-K for the year ended October 2, 2021, including under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” quarterly reports on Form 10-Q, including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and subsequent filings with the Securities and Exchange Commission.

The terms “Company,” “we,” and “our” are used in this report to refer collectively to the parent company and the subsidiaries through which our various businesses are actually conducted.

  Contacts: David Jefferson Corporate Communications 818-560-4832

Alexia Quadrani Investor Relations 818-560-6601

  PDF: Q4 FY22 Quarterly Earnings Report

Research Areas

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Visual Computing

Labs & people, zürich, switzerland.

Costanza Improta

Software Engineer

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Learning a Generalized Physical Face Model From Data

July 28, 2024 SIGGRAPH (2024) Lingchen Yang (ETH Zurich) Gaspard Zoss (DisneyResearch|Studios) Prashanth Chandran (DisneyResearch|Studios) Markus Gross (DisneyResearch|Studios / ETH Zürich) Barbara Solenthaler (ETH Zurich) Eftychios Sifakis (University of Wisconsin Madison) Derek Bradley (DisneyResearch|Studios)

Versatile Vision Foundation Model for Image and Video Colorization

July 28, 2024 SIGGRAPH 2024 Vukasin Bozic (ETH Zürich)  Abdelaziz Djelouah (DisneyResearch|Studios) Yang Zhang (DisneyResearch|Studios) Radu Timofte (University of Wurzburg) Markus Gross (DisneyResearch|Studios / ETH Zürich)  Christopher Schroers (DisneyResearch|Studios)

Controllable Neural Style Transfer for Dynamic Meshes

July 28th, 2024 SIGGRAPH 2024 Sergio Sancho (DisneyResearch|Studios/ETH Joint PhD) Guilherme G. Haetinger (DisneyResearch|Studios) Jingwei Tang (DisneyResearch|Studios) Raphael Ortiz (DisneyResearch|Studios) Paul Kanyuk (Pixar Animation Studios) Vinicius Azevedo (DisneyResearch|Studios)

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In a reversal, Disney's media assets are starting to generate more excitement than its parks

Here’s a surprise:  Disney ’s media business isn’t weighing down the company anymore.

The primary Disney investor narrative since 2022 has been how streaming losses, combined with a declining traditional pay TV business and a string of box office failures, have been anchoring  surging sales and profits  at the company’s theme parks and resorts. The result has been a company whose shares have fallen about 24% in the past two years, while the S&P 500 has gained 28% in the same period.

The company’s  second-quarter results  suggest a shift is happening. Disney’s combined streaming businesses — Disney+, Hulu and ESPN+ — turned a quarterly profit for the first time ever, making $47 million. That’s a significant improvement from losing $512 million in the same quarter a year ago.

Disney’s theatrical unit is also on a hot streak. “Inside Out 2” became the highest-grossing animated film of all time in recent weeks. “Deadpool & Wolverine”  has taken in  $824 million after two weeks of global release. Disney has become the first studio in 2024 to top $3 billion in worldwide ticket sales.

Meanwhile, Disney saw a “moderation of consumer demand towards the end of [fiscal] Q3 that exceeded our previous expectations” for its theme parks division. That caused shares to slump about 3% in early trading.

Disney Chief Executive Officer Bob Iger said during his company’s earnings conference call that he expects the momentum for the media business will only gain steam. That’s music to the ears of Wall Street, which wants both growth and profitability.

“We feel very bullish about the future of this business,” Iger said in reference to streaming. “You can expect that it’s going to grow nicely in fiscal 2025.”

Iger referenced a planned crackdown on password sharing, which will begin “in earnest” in September, as a tool that will help generate new subscribers and added revenue for the company. A similar effort from  Netflix  has helped the world’s largest streamer  add new customers  during the past year.

Disney is also  raising prices  for its streaming services in mid-October. Most plans for Disney+, Hulu and ESPN+ will cost $1 to $2 more per month.

Iger rattled off a list of movie titles that Disney hasn’t yet released to emphasize the studio’s solid positioning for the rest of 2024 and beyond.

“Let me just read to you the movies that we’ll be making and releasing in the next almost two years,” Iger said. “We have ‘Moana,’ ‘Mufasa,’ ‘Captain America,’ ‘Snow White,’ ‘Thunderbolts,’ ‘Fantastic Four,’ ‘Zootopia,’ ‘Avatar,’ ‘Avengers,’ ‘Mandalorian’ and ‘Toy Story,’ just to name a few. When you think about not only the potential of those in box office but the potential of those to drive global streaming value, I think there’s a reason to be bullish about where we’re headed.”

Disney isn’t de-emphasizing the parks. The company  said last year  it plans to invest  $60 billion  in its theme parks and cruise lines in the next decade. But it’s undoubtedly healthier for the company to persuade investors that the media units aren’t weighing down the share price.

Disney shares dropped Wednesday, likely because investors were focused on the parks. The next step is for shares to rise during a quarterly earnings report because investors are excited about the media units.

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Alex Sherman covers media for CNBC. 

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Disney (DIS.US) reports results and achieves streaming profitability faster than expected

Disney (DIS.US) shows growth after mixed results for the third quarter and achieving streaming profitability

Disney reports a 3.7% year-over-year increase following the publication of mixed results for the third quarter of fiscal year 2024, which exceeded most analyst expectations. The entertainment giant recorded revenue growth across all segments and achieved profitability in its streaming business, but reported a decline in operating profit in the Experiences segment.

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Key financial data: 

• Up 3.7% year-over-year from $22.3 billion in Q3 2023
• Above analyst expectations of $23.05 billion 
• Up 35% year-over-year from $1.03 in Q3 2023
• Above analyst expectations of $1.19 
• Up 19% year-over-year from $3.56 billion in Q3 2023
• Above analyst expectations of $3.84 billion

Segment results: 

• Revenue: $10.58 billion (up 5% year-over-year)
• Operating profit: $1.20 billion (nearly tripled year-over-year) 
• Revenue: $4.5 billion (up 5% year-over-year)
• Operating profit: $802 million (down 6% year-over-year) 
• Revenue: $8.4 billion (up 2% year-over-year)
• Operating profit: $2.22 billion (down 3% year-over-year)

Key streaming information:

• Combined streaming business achieved profitability for the first time
• Disney+ Core subscribers: 118.3 million (up 1% year-over-year)
• Total Disney+ subscribers: 154.5 million (slightly below analyst expectations of 154.6 million)
• Average monthly revenue per paid Disney+ Core subscriber decreased from $8.00 to $7.74

Streaming data:

• Disney+ Hotstar subscribers: 35.5 million (down 1% year-over-year)
• Total Disney+ subscribers: 154.5 million

Disney expects moderate growth in Disney+ Core subscribers in the fourth quarter, continuing the positive trend in the streaming segment.

However, not all segments look equally optimistic. The results of the Experiences segment in the fourth quarter will reflect weakening consumer demand, which may pose a challenge for this traditionally strong business area.

It's worth emphasizing that the company reported significant improvement in results in the Entertainment segment, both in box office and streaming. Particularly impressive is the fact that the company achieved profitability in its combined streaming businesses a quarter earlier than planned. The success of "Inside Out 2" proved crucial for this segment's results, demonstrating the strength of the brand in theaters and its positive impact on Disney+ subscriptions.

Not all parts of the business model showed satisfactory results. The Experiences segment experienced weakening consumer demand, which may signal broader economic trends. Sports also sends mixed signals - on one hand, it recorded an impressive 17% increase in domestic ESPN advertising revenue, on the other hand, it suffered from losses in the Star India business.

Disney CEO Robert Iger remains optimistic. He emphasized strong quarterly results, especially in the Entertainment segment, and expressed confidence in the company's ability to continue growing profits. Iger points to Disney's diverse portfolio of assets as a key factor enabling adaptation to changing market conditions.

Recommendations: Disney has 44 recommendations, of which 35 are "buy" with the highest target price at $145, 8 are "hold", and 1 is "sell" around $100. The 12-month average stock price forecast is $123.22, implying a 37% upside potential compared to the current price.

Technical analysis: The stock price remains near the previous day's closing price in pre-market trading at $89.5. Support will be the 78.6% Fibonacci retracement level at $88.29, which was broken during yesterday's session. If it's breached, the second support is at $86.24, at the October peak. The first resistance is the 61.8% Fibonacci retracement level, breaking which would open the way to test the beginning of the upward gap at $99.37. RSI is starting a slow rise from oversold levels, noting higher lows. MACD is losing downward momentum, which may also favor a bullish thesis.

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