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What to expect from Disney Q3 earnings

Yahoo Finance's Akiko Fujita and Alexandra Canal preview Disney earnings with Jon Christian, OnPrem Soultion Partners.

Video Transcript


AKIKO FUJITA: Welcome back to "Yahoo Finance Live." Well, the recovery at Disney parks as well as the momentum in its streaming service Disney+ certainly going to be in focus when the company reports its quarterly results after the bell today. The company is expected to return to revenue growth for the first time in five quarters. But the big question mark here, will a slowdown in its streaming service dampen some of the investor sentiment?

Let's bring in Jon Christian. He's OnPrem Solution Partners founding partner. We've also got Yahoo Finance's Ali Canal joining in on the conversation. Jon, it's good to talk to you today. We saw what happened when Netflix reported their numbers, pointing to the streaming giant losing ground in the US and Canada. A lot of that sort of pointed to a pull-forward that we saw last year. Are we going to see a similar disappointment today, you think, from Disney?

JON CHRISTIAN: I think, actually, you will still see pretty strong growth in their streaming numbers. Obviously, Disney has such a loyal brand and following. We saw that they hit 100 million subscribers faster than any of the other streaming giants, if you will. You will see, obviously, not as accelerated as in the previous quarters where we were in the pandemic because folks are starting to get back to their typical leisure activities where they're doing physical entertainment outside the homes. But I still think you're going to see pretty good results.

ALEXANDRA CANAL: So what specifically are you looking for in this earnings report when it comes to Disney and how they could keep that momentum alive amid this larger slowdown that we're seeing throughout all of these companies?

JON CHRISTIAN: Well, I think where Disney's in a great position, obviously is, out of a lot of the major studios and content providers, they get a huge amount of the revenues from their theme parks. And so what they get to do is play off not only the uptake in streaming but their other traditional revenue sources. So even if there is a little bit of a slowdown compared to in the pandemic and, say, last year, when there was a huge ramp-up, they're going to be able to offset with the earnings from the parks.

Now, one of the interesting things, obviously, is just, obviously, with the variant, if that's going to have any impacts on that. But I do think you're going to see a much better quarterly earnings on the theme parks, maybe not compared to 2019 levels obviously. But they're on a good track. I think that they were very well-positioned to go all in on streaming and really make up significant ground from where they were before the pandemic.

ZACK GUZMAN: It's interesting. I mean, when we're watching the streaming wars kind of shape up here on that content side, you have Salesforce announcing their own plans to enter into it in a very different kind of content strategy, more focused on kind of the business side of content and streaming, maybe a little bit of helpful tutorials. I mean, that seems like a smaller maybe opportunity here. But interesting to see Salesforce entering I mean, what do you make of that move and what it could signal for other maybe nontraditional entrants to the space?

JON CHRISTIAN: Yeah. Well, and I keep saying that one of my big things is its content is king. And so this is not just a matter of your traditional content providers doing this. So you're going to see large tech companies actually get into this.

What Salesforce has is a lot of customers, a great technology platform to back that on. And they have a bit of a different spin. They're going to be focusing on business content. And so I think they have a lot of chance to get a lot of eyeballs and get closer to their customer.

What's interesting about that is them going away from the traditional focus on copy and going to video content. And as you are able to deploy that out, obviously, the Dreamforce and things like that, they're going to have basically a platform to push that content. And I think you'll actually see the subscriber numbers go up pretty significantly.

And obviously, there's going to be competition with LinkedIn and things like that. So it's going to be exciting for new competition on a different front there.

ALEXANDRA CANAL: Yeah. And it's interesting too because this entire platform strikes me as something that could potentially be bought down the line. And we know that M&A in the streaming industry is red-hot right now. So what should this company's strategy be with Salesforce+ moving forward?

JON CHRISTIAN: Yeah, well, and it's interesting there too because I think Salesforce is on a buying spree of their own. I think they definitely want to get right in the heart of creating content, getting closer to users, expanding.

But this is a little bit different from the acquisitions that we've seen before as opposed to pure entertainment content and being more business-focused content. But in terms of being able to spin things off, I don't think we're even close to seeing the end of these acquisitions. Right now, there is a war on either producing a significant amount of content internally or acquiring enough content to be a substantial platform to be able to compete.

AKIKO FUJITA: Jon Christian, OnPrem Solution Partners founding partner. And it's good we've got Ali Canal joining in on that conversation as well. Good to have you both on.