EQUITY REPORT 11.11.21 WALT DISNEY

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WALT DISNEY (Ticker: DIS)

 

Introduction:

The Walt Disney Company, formerly TWDC Holdco 613 Corp, is a worldwide entertainment company. The Company operates in four business segments: Media Networks, Parks Experiences and Products, Studio Entertainment, and Direct-To-Consumer and International. The media networks segment includes cable and broadcast television networks, television production and distribution operations, domestic television stations, and radio networks and stations. The Company’s Walt Disney Imagineering unit designs and develops new theme park concepts and attractions, as well as resort properties. The studio entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings and live stage plays. The Company also develops and publishes games, primarily for mobile platforms, books, magazines and comic books.

Number of employees: 203 000 people.

 

 

Q4 2021

Disney’s total revenue in the quarter ending October 2 came in at $18.5 billion. That was up 26% compared with a year ago, but below analysts’ expectations, with adjusted earnings per share of 37 cents missing by 12 cents. The company recorded a loss of 20 cents a share in the year-ago period.

Beginning with parks review of Q4 2021 earnings: experiences and products where Q4 operating income increased by $1.6 billion YoY. A profitable fourth quarter at parks and experiences reflects ongoing recovery from the COVID-19 pandemic. All sites were open for the entire quarter, although generally at reduced capacities. In the prior year quarter, Shanghai Disney Resort was open for the entire quarter, while Disney World Resort and Disneyland Paris were open for approximately 12 weeks. Hong Kong Disneyland Resort was opened for approximately four weeks and Disneyland Resort was closed for the entire quarter. Attendance trends continued to strengthen at domestic parks (USA), with Walt Disney World Q4 attendance up double digits versus Q3 and Disneyland attendance continuing to strengthen significantly from its reopening in the third quarter. Guest spending at domestic parks also continued its strong trend with per caps in the fourth quarter, up nearly 30% versus fiscal 2019.

At consumer products, YoY operating results declined in the fourth quarter, impacted by a tough comparison in games business due to the prior year performance of two titles, marvel’s Avengers and Twisted Wonderland.

Turning to media and entertainment distribution segment:

Fourth-quarter operating income decreased by approximately $600 million versus the prior year driven by lower results at Linear Networks, direct to consumer and content sales, licensing and others.

Lower results of broadcasting were driven by lower results at ABC and the owned television stations.

On the direct-to-consumer side, the portfolio streaming services, Disney+, ESPN+, and Hulu continued to perform well with 118.1 million, 17.1 million and 43.8 million subscribers, respectively, for a total of 179 million subscriptions,  Q4 operating results decreased by $256 million YoY, driven by higher losses at Disney+ and ESPN+ partially offset by improved results at Hulu. At Disney+, the higher loss versus the prior-year quarter was driven by higher programming, marketing, and technology costs.

These higher costs were partially offset by increases in subscription and premier access revenue. Higher subscription revenue reflects subscriber growth and increases in retail pricing, and the increases in costs reflect the ongoing expansion of Disney+. They ended Q4 2021 and FY 21 with over 118 million global paid Disney+ subscribers reflecting over 2 million net additions from Q3, in line with the subscriber guidance.

Moving on to content sales, licensing, and others, results decreased in the fourth quarter versus the prior year to an operating loss of $65 million driven by lower theatrical and TV SVOD distribution results,

Outlook

For FY 22, they expect an increase of CAPEX by $2.5 billion vs 2021 driven by the delivery of the Disney Wish, as well as another increased spending at DPEP and corporate.

The main goal for Disney+ is to reach between 230 million and 260 million paid Disney+ subscribers globally by the end of the fiscal year 2024, and with Disney+ achieving profitability that same year. They expect that Disney+ will reach its peak year of losses in fiscal 2022

Additionally, they plan to bring Disney+ to consumers in 50+ additional countries, including in Central Eastern Europe, the Middle East, and South Africa. The main objective is to more than double the number of countries they are currently into over 160 by FY 2023.

SHARE PRICE – In 2021, the stock dropped 9.2%. The share price (11/11/2021) closed at $162.11 per share.

 

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