Welcome to the latest episode of the Full-Court Finance podcast from Zacks Investment Research where Associate Stock Strategist Ben Rains dives into Disney’s (DIS - Free Report) Q4 financial results. The episode also breaks down the entertainment giant’s streaming future and details how ESPN and ESPN+ will play vital roles.
Disney’s adjusted quarterly earnings surged 38% and easily beat our Zacks Consensus Estimate. Meanwhile, the company’s revenues climbed 12% to reach $14.3 billion and top our estimate. Disney’s Studio Entertainment division proved to be the major Q4 winner after its revenues skyrocketed 50% to $2.2 billion. But we should remember that Studio Entertainment is Disney’s most volatile segment.
Therefore, long-term Disney investors should pay close attention to Disney’s 21st Century Fox (FOXA - Free Report) deal after it cleared a major regulatory hurdle last week. The company also officially announced the name of its stand-alone streaming service that will launch late next year to take on Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , and soon Apple (AAPL - Free Report) and AT&T (T - Free Report) . On top of Disney+ news and updates, Disney’s largest division always deserves a great deal of attention.
Disney’s Media Networks unit, which is comprised of its cable and broadcast divisions, revenues jumped 9% to reach roughly $6 billion to account for 42% of total revenue. The company’s cable unit, driven by ESPN, performed well. But ESPN’s costs continue to rise as advertising revenues slip. Still, even as these problems mount, ESPN looks strong in a traditional TV industry that has struggled tremendously.
Live sports have helped keep many cable users around, but even sports are headed in a new direction. Luckily, Disney, spurred by BAMTech (which also works with HBO, MLB, the PGA TOUR, WWE Network (WWE - Free Report) , and others) has already successfully jumped into streaming sports with ESPN+.
Looking forward, ESPN will continue to play a major role at Disney and its streaming push could help the company stand out as the likes of Amazon, Facebook (FB - Free Report) , Twitter (TWTR - Free Report) , Google (GOOGL - Free Report) , and other powers all jump into live sports.
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