Disney Posted Some Enchanting Fourth-Quarter Results

Disney Posted Some Enchanting Fourth-Quarter Results

24 days ago2 mins

What’s going on here?

Disney’s fourth-quarter results put the magic back in the kingdom.

What does this mean?

Disney was stuck on pause last year, after a costly push for new customers fell flat while existing subscribers ditched their paid cable memberships. But if real life is an old-school fairytale, stuffed full of subliminal heteronormative messaging, Bob Iger is the buff knight in shining armor. Disney’s former CEO returned to the helm and swiftly started checking boxes on the to-do list. By the end of last quarter, costs were cut, streaming business was better, theme parks were full, and sports channel ESPN was back on the map – all of which translated to better-than-expected profit. With any luck, that could make investors believe in the company’s newly bolstered foundations and give the struggling stock a sprinkling of pixie dust.

Disney subscribers

Why should I care?

Zooming out: Someone chanted “Bibbidi-Bobbidi-Boo”.

The Magic Kingdom is a big place. Disney’s roster of parks, entertainment channels, and trademarks can leave investors’ heads spinning – and the same goes for any companies with complicated storylines. The main number to watch, though, is free cash flow: the amount that’s left after a firm’s paid for projects and expenses. In Disney’s case, the company believes its lower costs, a streaming business that’s verging on breakeven, and heftier cable profit could pull it to an $8 billion bounty this year. That would be 60% higher than last year, and not that far off its record $9.8 billion.

Disney stock
Source: Google Finance

The bigger picture: ESPN’s a good sport.

ESPN’s results are usually lumped into Disney’s numbers, but the sports network won space for itself for the first time this earnings season. No wonder: ESPN pulled in nearly $1 billion in profit, 16% more than the same time last year and around one-third of Disney’s overall total. Investors’ doubts about the network’s potential have been weighing on Disney’s stock, so this strategic show and tell could release some of that tension.



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