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Factors to Consider Ahead of Disney's (DIS) Q4 Earnings

Zacks Equity Research

Disney’s DIS fourth-quarter fiscal 2019 results are expected to have benefited from the addition of Hulu and Fox assets. However, a mixed attendance level at its theme parks is expected to have hurt the top line.

The company is set to report fourth-quarter fiscal 2019 results on Nov 7. The top line is expected to have benefited from strong box-office collections of The Lion King (released on Jul 19).

However, ongoing investments in ESPN+ and Disney+ are expected to have negatively impacted the bottom line.

Click here to know how Disney’s overall performance is likely to be.

Fox Assets & Hulu to Drive Growth  

Media Networks’ top-line performance in the fourth quarter is expected to reflect contribution from 21st Century Fox (21CF) assets that the company acquired on Mar 20.

Moreover, Disney’s decision to add licensed content to Hulu might have positively impacted the top line, owing to the service’s ability to attract users.

The Walt Disney Company Revenue (TTM)


This is also expected to boost Hulu’s competitive position in the streaming space, which is currently dominated by the likes of Netflix NFLX, Amazon’s AMZN prime video and AT&T’s T HBO.

The Zacks Consensus Estimate for Media Networks’ is pegged at $5.92 billion, implying a decline of 0.7% from the year-ago quarter’s reported figure.

Moreover, Disney expects the 21CF’s television businesses to contribute roughly $200 million to operating income, with two-third from broadcasting and the rest from cable. Nevertheless, lower program sales and higher content development expenses are expected to have negatively impacted the bottom line.

Further, the bottom-line performance is expected to reflect difficult comparisons at ABC Studios and higher programming expenses at ESPN, resulting from contractual rate hikes and launch costs for the ACC Network, and lower ad revenues.

Attendance Levels at Theme Parks Likely to Decline

Growth in attendance level at Disney’s Tokyo theme park is expected to have aided the Parks, Experiences & Consumer Products segment’s top line in the to-be-reported quarter.

Moreover, the attendance level at Disney’s domestic theme parks is expected to have improved in the to-be-reported quarter, primarily owing to the Labor Day weekend (Sep 2).

The Zacks Consensus Estimate for the segment’s revenues is pegged at $6.49 billion, indicating growth of 28% from the figure reported in the year-ago quarter.

However, lower attendance at Hong Kong Disneyland, primarily due to political unrest, is expected to have hurt the segment’s top line.

Notably, Disney expects the Parks, Experiences and Products segment operating income to benefit from the full quarter of Star Wars: Galaxy’s Edge at Disneyland and growth in merchandise licensing.

Zacks Rank

Disney currently has a Zacks Rank #5 (Strong Sell).

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