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Disney's Q3 Earnings Call: Launching an ESPN Streaming Service, the Zika Virus, and Disney Shanghai's Blowout Opening

Walt Disney (NYSE: DIS) reported solid fiscal third-quarter 2016 results on Aug. 9. The entertainment giant's year-over-year revenue and adjusted earnings per share grew 9% and 12%, respectively. Results were driven by the release of three blockbuster movies in the quarter and by continued strength in domestic parks.

This article's purpose isn't to rehash the results, but to share key information discussed on the company's Q3 analyst conference call. Here are five things you should know.

Image source: Disney.

BAMTech stake and plans to launch a direct-to-consumer ESPN streaming service

From CEO Bob Iger's remarks:

We are acquiring a 33% stake in BAMTech, the industry leader in video streaming, data analytics and commerce management. We have the option to acquire majority ownership in the future. And through this investment, we plan to launch a new direct-to-consumer ESPN-branded multi-sports subscription streaming service.

Iger said acquiring the BAMTech stake is a key part of the company's strategy to ensure that ESPN and its other brands remain relevant and strong in a changing TV-viewing market. The leading sports cable network has been steadily losing subscribers because consumers are increasingly dropping or slimming down their large cable bundles due to the availability of subscription video streaming services offered by companies such as Netflix and .

You can read details here about the BAMTech deal and how it will help Disney grow its empire.

A new big "skinny bundle" win

From Iger's remarks:

AT&T DirecTV, the largest distributor in the country, will feature ESPN, ESPN2, ABC, Freeform, Disney Channel, Disney XD and Disney Junior in all subscription packages offered in its upcoming DirecTV Now OTT [over-the-top] service.

The partnership with AT&T (NYSE: T) , announced on the earnings call, is great news. This deal illustrates Disney's success in getting ESPN and other channels included in the various limited content -- or "skinny bundle" -- over-the-top streaming services that are rolling out.

Zika virus isn't to blame for attendance decline at domestic parks

From CFO Christine McCarthy's remarks:

Attendance at our domestic parks was down 4% in the third quarter, with most of that decline due to the adverse impact of the shift in the Easter holiday period. [Easter occurred in fiscal Q2 this year and fiscal Q3 last year.]

From Iger's remarks:

[W]e've not seen an impact [on our parks business] from Zika.

The news shared on the call was good to hear since it's likely that some investors have assumed that the Zika virus is keeping people away from Disney World, since Florida is one of several U.S. states that's been most affected. Iger also commented that business from Great Britain consumers at the company's U.S. parks has been "fairly strong," relieving concerns the fallout from Brexit -- the people of Great Britain voting to leave the EU -- could negatively impact planned international "holidays" to Disney's U.S. parks.

Importantly, the impact from lower domestic attendance was more than offset by strong per capita spending, which was up 8% on higher admissions and food and beverage spending.

Shanghai Disney's opening success quantified

From Iger's remarks:

More than 70 million people in China watched the opening ceremony live on television or digital streaming. ... We've welcomed well over 1 million guests since we officially opened the gates on June 16... [P]eople are staying in the park longer than we ever imagined they would and hotel occupancy is holding steady at 95%.We did some research and there was 98% awareness of the park among the people in Shanghai and well over 70% intent to visit from the people in Shanghai.

We knew Chinese consumers were eager to rush the gates of Disney's first park in mainland China due to how quickly opening day tickets and hotel rooms were snatched up. The stats Iger shared quantify this enthusiasm.

The massive Chinese park should prove a huge catalyst for growth going forward across Disney's empire. It will be many Chinese consumers' first -- or at least most intimate -- experience with a Disney product. If they have a great experience, they'll be hungry for more of the Mouse's offerings.

Star Wars mania, Take 2

From Iger's remarks about Rogue One, the stand-alone Star Wars movie that's set to be released domestically on Dec. 16:

The level of fan enthusiasm we're seeing for Rogue One is roughly on par with what we saw for The Force Awakens at similar points in the marketing campaign. For example, views for the first Rogue One trailer were about even with the first trailer for The Force Awakens when it debuted.

Iger's news is music to investors' ears, because it's possible to wonder after the phenomenon success of The Force Awakens if consumers will eagerly devour another Star Wars film just a year later. Investors should get a taste of the enthusiasm for Rogue One when Disney reports its fiscal fourth-quarter results, since the initial roll-out of movie-based products begins in the quarter. We know this because Hasbro (NASDAQ: HAS) CEO Brian Goldner said on the toymaker's second-quarter earnings call that the company will begin rolling out its Rogue One toys in late September.

Hasbro has been a big beneficiary of Disney's recent success, since it holds the license to produce Star Wars -based toys, and dolls based on the popular Disney Princess and Frozen characters.

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Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of and recommends, Hasbro, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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.

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