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Kearney's Greg Portell on his biggest takeaways from Disney's Q4 earnings

Greg Portell, Partner & Head of Global Consumer Industries & Retail Practice at Kearney, joined Yahoo Finance Live to recap his biggest takeaways from Disney's fourth-quarter earnings.

Video Transcript

SEANA SMITH: Disney reporting its first annual loss in 40 years, suspending its dividend, but Disney+ was once again the standout with more than 73 million subscribers. And that, of course, was enough to boost the stock today with shares closing up just around 2%.

So for more on this, we want to bring in Greg Portell. He's the Head of a Global Consumer Industries and Retail Practice at Kearney. Greg, it's great to have you.

When we take a look at the outperformance of Disney+, I think the big question right now is whether or not that's enough to buoy the stock here going forward. How are you reading this?

GREG PORTELL: Well, the real question is how are they able to compete in this market that's becoming saturated? And that's where Disney has an advantage because unlike a lot of the other media companies, they really do think of themselves as a consumer-brand company. So they're very used to competing, you know, for share of eyes and share of wallet, which is something that media companies traditionally haven't had to worry about.

ADAM SHAPIRO: So I'm curious as someone who comes out of old media-- you know, worked for ABC affiliates. I asked this of a guest yesterday. I'm going to ask you. If that's the business model for them, what's the use of hanging onto ABC or even ESPN, you know, the cable stuff? Is it time to sell it?

GREG PORTELL: Well, optionality matters. If you think about Disney, what they realize is their core asset is entertainment, making people smile, but it's content. And so when you think about the critical strategy decisions they have to make going forward, it all hinges on that optionality of how do you get that content in the hands of the consumer or on the devices of the consumer? So the more access points they have, the more optionality they have, and they're going to be able to better compete with that flexibility. So from a strategic perspective of how do I engage consumers? having the broadcast unit makes a lot of sense.

SEANA SMITH: Greg, right now their direct-to-consumer business clearly doing well, but parks are suffering. Their entertainment when it comes to studios are suffering. So when you take a step back and then look at the streaming costs and the content costs that Disney is facing right now, how are you looking at that?

GREG PORTELL: Well, I think the pressure on the parks and the studios business is to be expected given COVID. I mean, it's very difficult to watch management try to navigate around those challenges. But what does give you hope is the fact that they have been able to manage their costs as they go through that.

So when you look at how a management team comes against-- comes up against a challenge such as COVID or such as any other shocks they face, their ability to manage costs while still making the critical decisions gives you some confidence that those sectors are still going to be in pretty good shape.

ADAM SHAPIRO: I'm trying to be an optimist here. So once we have the vaccine, once everyone in the country is inoculated, I've got to imagine with all the money we talk about in US savings accounts right now, there's going to be a huge surge to vacation-type resorts, and Disney is just-- they've got to be poised at this point for some kind of tremendous growth.

GREG PORTELL: Well, most consumers are excited to be able to go to the grocery store right now or out to a restaurant. So if they can finally start crossing state lines, you're going to look for them to start splurging on those higher-end experiences. And the more Disney is able to sort through and continue to enhance their on-premise entertainment, you'll definitely see them take advantage and benefit from that consumer trend.

SEANA SMITH: Greg, are you a buyer of Disney right now?

GREG PORTELL: Well, I think there's a lot of positives there. So we don't really get into the ups and downs of the movement of the stock price, but when you look at management's ability to control the P&L and some of their ability to really commit to the strategic choices they're making, there's a lot to be positive about.

ADAM SHAPIRO: And it doesn't scare you about, you know, suspending the dividend?

GREG PORTELL: No. I mean, that goes back to optionality. I mean, what you want to be able to do is you want to give the management team the most flexibility as they start to try to navigate out of this, and pulling back on the dividend makes a lot of sense given the unknown ahead of us.

SEANA SMITH: All right, Greg Portell of Kearney, thanks so much for taking the time to join us.