Disney to Report Results in Accordance With New Structure

An image of a pair of glasses on a newspaper
Credit: Shutterstock photo

DisneyDIS is adopting a new financial reporting structure for its first-quarter fiscal 2019 results as stated at the time of its business reorganization last year. To adapt to the dynamic media landscape, the company had reorganized its three reporting segments into four.

The new segments include Media Networks, Studio Entertainment, Parks, Experiences & Consumer Products and Direct-to-Consumer & International (DTCI).

The Media Networks and Studio Entertainment segments remained unchanged except that Disney's International Channels, "management of global advertising sales/technology and management of program sales" became part of DTCI segment.

Additionally, global consumer products business was merged with Disney's Parks and Resorts under Parks, Experiences & Consumer Products. The DTCI segment includes ESPN+, Hulu and upcoming Disney+ and is responsible for distributing Disney's content to users worldwide.

Disney is making significant investments in both content and technology to create a niche for its direct-to-consumer (DTC) platforms.

The Walt Disney Company Revenue (TTM)

The Walt Disney Company Revenue (TTM) | The Walt Disney Company Quote

Let's Take a Closer Look at Disney's DTC Platforms

ESPN+, which was launched in April 2018, surpassed one million subscribers in the first five months primarily on the back of a strong content lineup and targeted demographic advantage.

Additionally, Disney's CEO Robert A. Iger believes that the upcoming service Disney+ will attract users by leveraging the company's existing IP along with investments in original content . Moreover, the company's acquisition of Twenty-First Century Fox will further strengthen its film and TV slate.

Hulu added 8 million U.S. subscribers in 2018, primarily on content strength, bringing the total count to 25 million. Notably, Disney, which currently holds 30% stake in Hulu is entitled to another 30% stake after acquiring Fox, while Comcast CMCSA owns 30% and AT & T owns the other 10%.

High Investments and Stiff Competition to Continue

Increasing investments are likely to hurt Disney's bottom line in the near term. Notably, management guided that investments in ESPN+ will have a negative impact of $100 million on operating income in first-quarter fiscal 2019. Moreover, losses from Hulu and its DTC platforms are likely to persist. Disney lost more than $1 billion from its streaming segments in 2018, with about $580 million loss from Hulu.

Further, Disney will face competition not only from dominant player like Netflix NFLX but also from free streaming services. Both Amazon and Sinclair Broadcast SBGI recently launched a free ad-supported service hoping to quickly attract users and advertisers. Moreover, Comcast owned NBC Universal is set to launch a free ad-supported service by early 2020.

Nevertheless, we believe that Disney's franchises and its vast library, which are already popular worldwide, may give it an edge and help it win subscribers from its peers.

Disney currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 - 2017, they soared far above the market's +126.3%, reaching +181.9%.

This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.

See Stocks Today >>

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

The Walt Disney Company (DIS): Get Free Report

Netflix, Inc. (NFLX): Get Free Report

Sinclair Broadcast Group, Inc. (SBGI): Free Stock Analysis Report

Comcast Corporation (CMCSA): Get Free Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More