- Focus on streaming business and subscriber growth
- Rivals have recently disappointed
- Resorts business expected to perform well
Analysts and investors are waiting with baited breath for fiscal fourth-quarter results from media and entertainment group Walt Disney (DIS:NYSE) due after the market close tomorrow night.
Shares in the company fell 6% last week, almost double the 3.3% decline in the S&P 500 index, after weak results from two of its major rivals.
WHAT ARE INVESTORS WATCHING?
All eyes will be on subscriber numbers in the battle between Disney and arch-rivals Netflix (NFLX:NASDAQ), Paramount Global (PARA:NASDAQ) and Warner Bros. Discovery (WBD:NASDAQ).
Paramount revealed last week its Paramount+ streaming service had added 4.6 million subscribers in the third quarter to September to take it to a total of 46 million.
However, shares in the media group fell 18% to a new post-pandemic low as revenues and earnings missed estimates due to lower advertising, subscription and licensing income.
As well as cutting costs, Paramount’s chief finance officer said the firm saw opportunities to increase the price of its streaming service as pricing was ‘moving higher across the industry’.
Warner Bros. Discovery also disappointed the market last week, sending its shares down 13% as revenues missed forecasts and losses were almost double the consensus.
In its third fiscal quarter to the beginning of July, Disney reported slightly over 152 million subscribers to its Disney+ streaming service including 44.5 million in the US and Canada.
Including its Hulu and ESPN services, the House of Mouse actually overtook Netflix with 221.1 million subscribers so there is a lot to play for in its final quarter.
Netflix announced last month it had gained new customers for the first time this year with 2.4 million net new additions in the third quarter against a forecast of 1 million, sending its shares soaring 12% in a day.
The company said it expected to add 4.5 million new customers in the fourth quarter, but it wouldn’t give any future guidance from next year.
WHAT ARE ANALYSTS EXPECTING?
For the third quarter, Disney posted revenues, earnings and subscriber numbers above expectations, sending the shares up 5% the following day.
According to Visible Alpha, the consensus forecasts are for fourth-quarter revenues of $21.2 billion against $18.5 billion last year and earnings per share of 57c against 37c previously.
Disney has launched several new initiatives to drive subscriber growth, including giving Disney+ customers early access to official merchandise ahead of the general public heading into the holiday shopping season.
It has also joined forces with the BBC to show future seasons of the popular Doctor Who tv series outside the UK and Ireland, turning it into a global franchise.
As well as the streaming business, the resorts division is expected to have performed well thanks to a surge in travel and entertainment spending over the last few months.
Disney shares are down 36% this year while Netflix and Warner Bros. Discovery shares have more than halved, down 57% and 55% respectively, and Paramount Global shares are down 48%.
