Investors will obviously be looking at how Disney + performs and reopening theme parks, but some cheeky dividend news will be welcomed as well.
Walt Disney Co () releases its second quarter results Thursday at 4:30 p.m. ET, alongside an investor webcast.
While this has been a tough year in the midst of the pandemic, Disney is still the world’s largest media conglomerate, so it clearly has a robustness that other companies don’t.
So what should those watching the House of Mice be looking for?
Disney + has long been touted as the most likely “ killer ” among the streaming industry’s second mover – and statistics to date support this favoritism shown by market experts.
The streaming market is increasingly fractured with cable network operators launching their own platforms rather than selling rights to companies like and Amazon – notably deployments of Paramount + (ViacomCBS), HBO Max (Warner ) and Peacock (NBCUniversal).
Disney nevertheless has a solid base and benefits from its strong brands and intellectual property, as well as a significant head start and a first-mover advantage among “ studio streamers. ”
Disney + has just over 100 million user subscribers, while Hulu, separate and owned by Disney, has around 40 million, on top of that, sports streaming service ESPN + is estimated to have a little more. of 12 million subscribers.
Streaming in general – and Disney + in particular – has been a haven for the group during the pandemic, offsetting at least some of the losses elsewhere in the business.
Experts believe that subscriber volumes may also continue to increase as the company continues its global rollout, as several territories in Eastern Europe and Asia have yet to be addressed.
Content is still king
The content offering was also recently bolstered by the consolidation of Disney’s extended library through “ Stars ” (which hosts an IP address acquired and retained following the Fox takeover). At the same time, it encourages the promotion of bundles that combine one or both ESPN + and Hulu with major Disney + subscriptions.
Disney’s streaming titles will likely be pulled by the group’s four big brands: Disney, Marvel, Star Wars, and Pixar. Column inches can also be captured if there are any revelations relating to the upcoming movie slate for 2022 and beyond.
Q2 performance will likely be enhanced by the release of Marvel’s WandaVision and the debut of the Falcon and Winter Soldier series. Both of these have been both acclaimed and excited about pop culture, and we can expect them to have generated new subscription volumes.
After the quarter, Disney began the final Star Wars series – weekly animated “ The Bad Batch ” – and next month Loki, the next high-profile Marvel series, is also releasing on Disney +.
The Walt Disney Animation unit in March released Raya and the Last Dragon with limited theater and on Disney + Premier Access (the pay-per-view section of the streaming platform).
Oddly enough for investors, Premier Access’s performance and strategy could be central to the future as they contemplate the gradual reopening of theaters.
Reopening of the cinema
The wider international reopening of theaters will be closely watched and box office performance marked compared to Premier Access – not least because Disney has a slate of films stacked up for the next eighteen months or so, as they phase out the movie. backlog disrupted by COVID.
It starts with May’s live-action Cruella movie starring Emma Stone, slated for release in late May, and then in June Pixar’s next big feature film starring Luca is set to hit theaters and Premier Access.
Marvel has three films scheduled (four if you include the new Spiderman sequel produced) before the end of 2021.
Prior to the pandemic, these films enjoyed remarkable commercial box office success, with $ 1 billion in revenue not uncommon in the recent past. It remains to be seen how lucrative the new home-plus-cinema model is.
Parks and vacations
Disney’s theme park business lost money during the pandemic.
In February, the company’s quarterly results showed a US $ 2.6 billion decline in park activity, amid continued disruptions, sporadic hotel closures and reduced capacity.
Orlando Parks and a number of Orlando hotels reopened in 2020, as did Disney Parks in Shanghai and Hong Kong. During the second quarter, Disney reopened Disneyland in California on April 30, while Disneyland Paris has yet to reopen.
While most Disney parks are now open, they continue to operate at reduced capacity, several hotels and restaurants remain closed.
Disney cruise operations are still materially closed, with the latest round of suspensions affecting most vacation itineraries through July or October.
Comments on the recovery and restart of tourism activities will influence the market outlook.
When will the dividends come back?
Disney’s dividend was suspended soon after the start of the pandemic to save cash.
Comments on the timing of the dividend resumption will be a hot topic for investors, even as market watchers believe it may be too early in the company’s pandemic recovery.
At the end of the first quarter, it had $ 31 billion in cash and receivables and $ 52 billion in debt, and over the three-month period it generated only $ 77 million in cash flow. positive cash flow.
Perhaps it must have been a particularly lucrative trading period for the dividends to return so soon.