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) future as the company embarks on its streaming TV journey to challenge Netflix (NFLX - Free Report) and Amazon Prime (AMZN - Free Report) . The episode details Disney’s latest quarterly financial results, earnings call, and investor day to find out what we need to know about ESPN+, Disney+, and more.
Disney reported its Q2 fiscal 2019 financial results after the closing bell last Wednesday, May 8. The entertainment giant reported adjusted quarterly earnings of $1.61 per share, which topped our $1.59 per share Zacks Consensus Estimate. It is worth noting, however, that DIS’ earnings fell 13% from the year-ago period as it continues to spend on its streaming TV future. Meanwhile, revenues popped 3% and also surpassed our consensus mark.
Shares of Disney hadn’t done much since the firm reported its quarterly results. Nonetheless, DIS stock is up over 23% in 2019 and 15% since its April 11 investor day when it detailed some of its plans for its new Disney+ streaming service. The company also detailed plans for its streaming sports future that currently centers around its quickly expanding ESPN+ streaming service that launched in April 2018. Morgan Stanley (MS - Free Report) analysts expect ESPN+ will hit roughly 2.7 million paid memberships by the end of 2019, up from roughly 2 million now. Meanwhile, Disney projects to post some double-digit user figures by 2024.
Disney’s streaming sports offering, which costs $4.99 per month, is focused on expansion through secondary offerings such as UFC and soccer at the moment, as the NFL and NBA are still locked into cable-focused TV rights deals. With that said, we are likely not too far away from a time where sports fans can access all that ESPN has to offer completely free of cable. Meanwhile, ESPN is ready to benefit from legalized sports gambling through more coverage, as major North American professional leagues partner with the likes of Caesars (CZR - Free Report) and MGM (MGM - Free Report) .
In the end, Disney looks poised to become a streaming TV powerhouse, offering consumers access to some of the biggest names in entrainment, including Pixar, Star Wars, Marvel, and National Geographic. The company’s purchase of key Fox (FOXA - Free Report) units is set to bolster this push as it prepares to compete against streaming offerings from Apple (AAPL - Free Report) , AT&T (T - Free Report) , and more. Let’s also not forget that Disney is a majority owner of rapidly growing Hulu. And just today reports broke that Disney and Comcast (CMCSA - Free Report) struck a somewhat complex deal that gives operational control over CMCSA’s portion of Hulu to Disney. Meanwhile, Comcast has the option to sell Disney its stake in the streaming video firm down the road.
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