Walt Disney Company (DIS) Conference May 14, 2025 09:40 AM ET Speaker0 About where we wanted to be in the world. We knew, that there was demand for Disney product around the world. I've said this publicly before for every one theme park visitor, that we have in our existing experiences today. We believe there are 10 more out there that want to come and participate in the Disney experience. They just haven't had an opportunity to do so. So as we looked around the world, we looked at The Middle East and UAE s ...

Industry Overview - The Zacks Media Conglomerates industry is thriving due to the consumer shift towards over-the-top (OTT) content, with major players like Disney, Atlanta Braves Holdings, and Madison Square Garden Entertainment investing heavily in original content to attract Gen Z and millennial subscribers [1][2] - The industry's growth is supported by cost-effective alternative packages, such as skinny bundles, which offer lower prices compared to traditional offerings [1] - Challenges include declining broadcast television ratings, reduced demand for home entertainment sales, and advertisers' cautious spending amid inflation and high interest rates [1][2] Trends Impacting the Industry - Original content is driving growth as media companies adapt to consumer preferences for subscription services over traditional pay-TV, leading to increased opportunities for targeted advertising [3] - The demand for high-speed internet is a key catalyst, enhancing the consumption of high-quality videos and binge-watching trends, particularly in international markets with a growing broadband ecosystem [4] - The industry faces difficulties from cord-cutting trends and the maturation of the pay-TV sector, which has led to increased competition from streaming services [5] Industry Performance - The Zacks Media Conglomerates industry ranks 44 within the broader Zacks Consumer Discretionary sector, placing it in the top 18% of over 245 Zacks industries, indicating positive earnings outlook [6][8] - Despite this ranking, the industry has underperformed compared to the broader sector and the S&P 500, returning 4.9% over the past year versus 15.8% for the sector and 10% for the S&P 500 [9] Valuation Metrics - The industry is currently trading at a trailing 12-month price-to-sales (P/S) ratio of 1.51X, significantly lower than the S&P 500's 5.33X and the sector's 2.28X, suggesting potential undervaluation [12] Company Highlights - **Atlanta Braves Holdings**: Reported a 27% year-over-year revenue growth to $47 million, with baseball revenues up 30% to $29 million. The company has a strong cash position of $244.7 million and access to $275 million in liquidity [15][17] - **Disney**: Achieved profitability for Disney+ and Hulu with a combined subscription base of 180.7 million. The company is trading at a discounted P/E ratio of 19.25, with projected 16% EPS growth for fiscal 2025 [20][22] - **Madison Square Garden Entertainment**: Revenues increased by 6% to $242.5 million, with adjusted operating income surging 50% to $57.9 million. The company is well-positioned for continued growth with diverse revenue streams and strong advance sales for upcoming events [25][27]

Dana Walden, co-chair of Disney Entertainment, laid out the media company's business strategy in a Tuesday interview with CNBC's Jim Cramer. She highlighted how Disney bundles streaming services in connection with leveraging its linear television arm."We look at our linear channels, our core linear channels — FX, Disney Channel, Nat Geo and ABC — and we look at it as an opportunity to program for audiences that are still watching on linear," she said. "And then that same content is windowed onto streaming, ...

This article has been reviewed according to Science X's editorial process and policies . Editors have highlighted the following attributes while ensuring the content's credibility: Credit: CC0 Public Domain ESPN said Tuesday that its new all-encompassing streaming service will take on a familiar name—ESPN—and launch in September at an initial price of $29.99 per month. The service will enable consumers to view all of ESPN's various networks, including ones devoted to the SEC, Big 10 and ACC college leagu ...

Core Points - Joint Base Pearl Harbor-Hickam will host a family event on May 16, 2025, in collaboration with Blue Star Families and The Walt Disney Company [1] - The event aims to provide U.S. military children and their families on Oahu with free Disney books and Disney-themed activities, including storytelling [2] - Blue Star Families is the largest nonprofit organization serving military and veteran families, focusing on empowering them through various programs [2][4] - Disney Publishing has contributed over 300,000 books to the Blue Star Books program, benefiting military families globally [5] - The Walt Disney Company has a long-standing commitment to supporting military families, rooted in the service of its founders during World War I [6] Company Overview - Blue Star Families has delivered more than $336 million in benefits since its founding in 2009, impacting over 1.5 million people annually [6] - The Walt Disney Company operates as a diversified international entertainment and media enterprise, with a focus on corporate citizenship and community support [8] - Morale, Welfare & Recreation (MWR) programs support the quality-of-life needs of service members and their families, contributing to resilience and readiness [9]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Walt Disney identified as a strong candidate due to its favorable growth metrics and Zacks Rank [2][10]. Group 1: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive as it signals strong future prospects [3]. - Disney's historical EPS growth rate stands at 31.7%, with projected EPS growth for the current year at 14.6%, surpassing the industry average of 11.1% [4]. Group 2: Cash Flow Growth - High cash flow growth is essential for growth-oriented companies, allowing them to fund new projects without relying on external financing [5]. - Disney's year-over-year cash flow growth is currently at 14.8%, significantly higher than the industry average of -8.5% [5]. - Over the past 3-5 years, Disney's annualized cash flow growth rate has been 4.4%, compared to the industry average of 1.7% [6]. Group 3: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements, making them a valuable metric for investors [7]. - The current-year earnings estimates for Disney have increased by 5.2% over the past month, indicating a favorable outlook [8]. Group 4: Overall Assessment - Disney has achieved a Growth Score of B and a Zacks Rank of 2, reflecting positive earnings estimate revisions and positioning it as a potential outperformer for growth investors [10].

Core Insights - The launch of a stand-alone ESPN streaming service at $30 a month is a significant development for Disney and the broader TV industry, allowing consumers to access sports without a cable subscription [2][10] - Disney's strategy has been to balance traditional cable offerings with digital services, but the shift towards streaming-only options is becoming more pronounced as cable subscriptions decline [5][7] Group 1: ESPN's Streaming Service - The new ESPN service aims to attract over 60 million potential customers who do not currently have cable subscriptions [2] - The service is expected to launch in late summer 2025, coinciding with the NFL season, despite speculation about a streaming-only version for the past decade [4] - ESPN's new offering may accelerate the decline of the cable TV industry as consumers may choose to drop cable in favor of the stand-alone service [3] Group 2: Industry Context - Disney has historically been cautious about moving to an ESPN-only model due to the revenue generated from traditional cable networks [5][6] - Other major cable channels, like HBO, have successfully transitioned to stand-alone streaming services, indicating a broader industry trend [7] - The recent failure of the Venu joint venture, which aimed to bundle sports offerings, highlights uncertainty about consumer demand for an ESPN-only streaming service [12][13] Group 3: Consumer Considerations - While the stand-alone ESPN service will provide access to many sports, it will not cover all major events, particularly NFL games, which are distributed across various networks [11] - The existence of multiple streaming options for sports raises questions about how many consumers will be willing to pay for individual services [14]

Group 1 - The core offering of the new ESPN streaming service is access to all content on ESPN's television channels, including professional and college football and basketball games [1][3] - The subscription price for the new service is set at $29.99 per month [1] - The launch of the new streaming service is scheduled for this fall [1][3]

Core Viewpoint - Disney has reported strong second-quarter fiscal 2025 results, surpassing earnings and revenue estimates, indicating robust momentum across its business segments [1][2]. Financial Performance - Adjusted earnings per share (EPS) increased by 20% to $1.45 compared to $1.21 in the same quarter last year [2]. - Total segment operating income rose 15% to $4.4 billion from $3.8 billion in the second quarter of fiscal 2024, while revenues grew 7% to $23.6 billion [2]. Strategic Execution - The results reflect successful execution of four strategic priorities: exceptional creative content production, streaming profitability, evolving ESPN into a leading digital sports platform, and driving long-term growth in the Experiences segment [3]. Segment Performance - The Entertainment segment saw operating income surge 61% to $1.3 billion compared to the prior-year quarter, driven by the profitability of the Direct-to-Consumer business [4]. - Direct-to-Consumer operating income increased by $289 million to $336 million, with Disney+ and Hulu achieving a combined 180.7 million subscriptions, including 126 million for Disney+ alone [5]. Future Projections - The Zacks Consensus Estimate projects fiscal 2025 revenues of $94.88 billion, indicating a 3.86% year-over-year growth, with earnings expected to increase 13.28% to $5.63 per share [6]. Streaming and Content Growth - Disney has achieved significant profitability improvements in streaming, enhancing investor confidence in its long-term strategy [9]. - The company continues to deliver successful films and series, with notable box office performances from titles like Mufasa: The Lion King and Thunderbolts [10]. Upcoming Releases - Anticipated titles set to drive box office revenues and streaming engagement include live-action adaptations and sequels, such as Lilo & Stitch and Zootopia 2 [11][12]. Sports Segment Growth - ESPN experienced its most-watched second quarter in primetime ever, with viewership among the key 18-49 demographic up 32% compared to the prior-year quarter [17]. - The company is preparing to launch a new direct-to-consumer product for ESPN, further solidifying its position in the digital sports market [18]. Expansion Projects - Disney is undertaking significant expansion projects globally, creating thousands of new jobs and celebrating anniversaries for its theme parks [19]. Valuation and Guidance - Disney stock is currently undervalued at 19.25 times trailing 12-month price-to-earnings, below the industry average of 21.37 times, presenting an attractive entry point for investors [21]. - Management has raised guidance for fiscal 2025, expecting adjusted EPS of approximately $5.75, a 16% increase over fiscal 2024, and projecting around $17 billion in cash from operations [22]. Conclusion - With profitable streaming services, successful box office hits, and significant expansion projects, Disney presents multiple growth opportunities and solid financial fundamentals, making it an appealing investment option [23].

Core Insights - The Walt Disney Company reported second-quarter fiscal 2025 adjusted earnings of $1.45 per share, exceeding the Zacks Consensus Estimate by 22.88% and reflecting a year-over-year increase of 19.8% [1] - Revenues for the quarter rose 7% year over year to $23.62 billion, surpassing the consensus mark by 2.1% [1] - Segmental operating income was $4.44 billion, up 15.4% year over year, and shares rose nearly 11% following the earnings report [1] Segment Breakdown - Entertainment revenues, making up approximately 45.2% of total revenues, increased 9% year over year to $10.68 billion, with segmental operating income surging 94.9% to $1.7 billion [2] - Experiences revenues, constituting 37.6% of total revenues, rose 5.9% year over year to $8.89 billion, while international revenues decreased 5.3% to $1.44 billion [3] - Revenues from Linear Networks declined 12.5% year over year to $2.42 billion, but operating income increased 2.3% to $769 million [3] - Direct-to-Consumer revenues increased 8.4% year over year to $6.12 billion [3] - Content Sales/Licensing and Other revenues grew 54.5% year over year to $2.15 billion, with operating income turning positive at $153 million compared to a loss of $18 million in the previous year [4] - Sports revenues increased 5% year over year to $4.53 billion, although operating income fell 12% to $687 million [4] Subscriber Information - As of March 29, 2025, Disney+ had 126 million paid subscribers, up from 124.6 million as of December 28, 2024 [5] - Domestic Disney+ average monthly revenue per paid subscriber increased 5% to $7.52, while international average monthly revenue per paid subscriber rose from $6.78 to $7.19 [5] Guidance - For fiscal 2025, Disney anticipates adjusted earnings of $5.75 per share, representing a 16% increase over fiscal 2024 [7] - Operating income growth in the Entertainment segment is expected to be in the double-digit percentage range [7] Strategic Developments - Following the earnings report, Disney announced plans for a new theme park and resort in Abu Dhabi, marking its first major venture in the Middle East [8] - This project is separate from the $60 billion Disney has committed to theme park investments over the next decade, highlighting the region's potential due to its proximity to one-third of the global population and a tourism market of approximately 500 million people [9]