Spekulatius Posted March 21, 2019 Share Posted March 21, 2019 6% revenue growth, from a base that wasn’t depressed in 2008 isn’t too bad. revenue growth / share was even better since they bought back a considerable amount of stock ((~20%+ of outstanding, but I could be off). Both AMCX and DISCA had untapped pricing power in 2008 that made it easy to grow for a couple of years until this fizzled out in or around 2013. DIS flatlined (or worse) since 2015, but they did grow earnings since then. DISCA bought a lot of revenue with Scripps (which was dilutive) and Eurosport and another foreign TV station. DIS bought Marvel, Lucasfilm and now the Twenty century studio. I believe they are better positioned than DISCA and AMCX, but the latter could pot. be purchased by a larger player. I think DIS can be compared to BRK in a roundabout way ,as they have become the go to home for premier entertainment property/ IP, while BRK is a permanent home for any private company where the owner compares about the LT prosperity more so than the sales price. Link to comment Share on other sites More sharing options...
DooDiligence Posted March 21, 2019 Share Posted March 21, 2019 : -ESPN has very much under-performed as people move away from sports TV. All the major sports networks offer subscription services, and online viewership is growing. IMHO this was a bad purchase. I disagree pretty strongly on ESPN being a bad purchase. They paid $19 B for cap cities in 1996. After multiple years of decline, operating income from the media networks segment (which is almost all stuff they got with cap cities, biggest items are ESPN and ABC) was $6.6 billion in 2018. They've reinvested the ESPN tsunami of cash into buying Marvel/Lucasfilm, and new parks, hotels, and cruise ships. The fact that it's declining now doesn't make it a bad purchase 23 years ago. I suspect (but haven't verified) that even if espn went to zero tomorrow the IRR on that acquisition would look pretty good. Disney is like a giant money triangle. Link to comment Share on other sites More sharing options...
LC Posted March 21, 2019 Share Posted March 21, 2019 : -ESPN has very much under-performed as people move away from sports TV. All the major sports networks offer subscription services, and online viewership is growing. IMHO this was a bad purchase. I disagree pretty strongly on ESPN being a bad purchase. You are right and I take it back - I was unclear. It was a very good purchase for reasons over the history of Disney ownership, for reasons you mention. My (very admittedly unclear) meaning was it is not the cash cow it was 10 years ago. Link to comment Share on other sites More sharing options...
rogermunibond Posted March 22, 2019 Share Posted March 22, 2019 LC - glad you clarified on ESPN. If anything the biggest error was not buying out Hearst's 20% stake in ESPN any years ago. Back when Buffett was on the ABC/Cap Cities board and voted against it. 2010 marked the downturn in ESPN subs from 100M and at the same time under John Skipper, ESPN committed big capital investments in NFL and NBA program rights. It's still a cash cow, just not the growth machine it was in the previous 20 years. Iger has turned Studio and Parks into growth engines now through smart capital allocation in Pixar, Marvel, and Lucasfilm and Disney Shangai, US parks refresh, and Disney cruise. He's done a fantastic job. Link to comment Share on other sites More sharing options...
LC Posted March 22, 2019 Share Posted March 22, 2019 https://www.ign.com/articles/2019/03/21/fox-layoffs-begin-following-disney-merger-4000-jobs-expected-to-be-cut Link to comment Share on other sites More sharing options...
Spekulatius Posted March 22, 2019 Share Posted March 22, 2019 https://www.ign.com/articles/2019/03/21/fox-layoffs-begin-following-disney-merger-4000-jobs-expected-to-be-cut Probably no surprise. When I started working in the US after about 2 years, I went through a merger where the company I worked for was acquired, and my first boss explained me how this works for employees: “We work for a whorehouse that just got sold to the highest bidder. The only certainty is that we get screwed.” He is a wise man. Link to comment Share on other sites More sharing options...
DCG Posted March 22, 2019 Share Posted March 22, 2019 Not sure ESPN was a bad purchase, but I feel like Disney is ruining ESPN and has turned it into a sports version of BuzzFeed. Link to comment Share on other sites More sharing options...
Liberty Posted March 22, 2019 Share Posted March 22, 2019 From the little that I know of it, ESPN seems like one of the best purchases ever. It was thrown in as an after-thought in previous deals with Capital Cities/ABC, and grew into one of the biggest media franchises in the world. It's facing headwinds now because it made a lot from being bundled, but it's probably still a thousand-bagger and can still be a cash cow for a while longer even if it declines. Link to comment Share on other sites More sharing options...
rogermunibond Posted March 22, 2019 Share Posted March 22, 2019 In the latest 10-K DIS reported 86M ESPN subs. From 2010 100M ESPN subs. In 17 and 18 they had stabilized somewhat at 88M with MVPDs but as those promotional rates fall off ESPN subs are dropping again. OTOH ESPN+ is doing all the right things - going after niche UFC, Serie A, Championship English soccer, etc. They will probably try to bid for online EPL or LaLiga and take that from BEIN or NBC. Link to comment Share on other sites More sharing options...
DooDiligence Posted March 22, 2019 Share Posted March 22, 2019 In the latest 10-K DIS reported 86M ESPN subs. From 2010 100M ESPN subs. In 17 and 18 they had stabilized somewhat at 88M with MVPDs but as those promotional rates fall off ESPN subs are dropping again. OTOH ESPN+ is doing all the right things - going after niche UFC, Serie A, Championship English soccer, etc. They will probably try to bid for online EPL or LaLiga and take that from BEIN or NBC. More Footy, yay! Link to comment Share on other sites More sharing options...
bizaro86 Posted March 22, 2019 Share Posted March 22, 2019 I don't see the business model for ESPN+ Because sports rights are regional, they only really have a US business with their IP. ESPN peaked around 100 MM subs. Even if you assume (generously, imo) that a quarter of those people are very interested in sports and will buy espn plus, I get the following math. 25 MM × 12 months × $5/month = $1.5 billion in revenue per year. They're paying $300MM/year for rights just to UFC. That doesn't include producing and distributing UFC, or any of their other costs (other sports, credit card fees, running the app, etc). Disney+ is different, because the market is worldwide and they (eventually) own those rights for all their content. I actually think they'd be better off bundling all their other content together. Include abc/fox together with disney/star wars/marvel/discovery and you have something for everyone. The target market for streaming 15 seasons of greys anatomy is different than that for disney junior, but together with their tent pole ip that's a Netflix killer. Link to comment Share on other sites More sharing options...
rogermunibond Posted March 22, 2019 Share Posted March 22, 2019 I agree that it's hard to see how ESPN+ works. But ESPN has to have an OTT in the event that they lose too many cable subs and to compete for OTT sports subs against Dazn, Fubo, B/R Live etc. There are a few sports rights that are global in nature. NBA and football (soccer) specifically Premier League, La Liga, and Champions League. UFC and MMA are somewhat global as well like boxing. Maybe cricket? Link to comment Share on other sites More sharing options...
estoybien Posted April 12, 2019 Share Posted April 12, 2019 I'm not an ESPN+ or Hulu subscriber, but I'll def get Disney+ (I have kids), and I might be willing to top-up to a Disney+/Hulu/ESPN+ package depending on the pricing. I don't even know what ESPN is like anymore, it's been so long. re ESPN, is ESPN+ more for actual sports watching, or do ppl also watch SportsCenter and other talking-heads/highlights shows on it just like they did on the cable network? Seems like ESPN in its heyday was very sticky, I had friends who'd just have it on for hours. Link to comment Share on other sites More sharing options...
CorpRaider Posted April 12, 2019 Share Posted April 12, 2019 Doesn't ESPN+ just have like a ancillary things that aren't on one of the ESPN networks? The disney+ name is confusing/suboptimal to me, coming from that perspective. Link to comment Share on other sites More sharing options...
rogermunibond Posted April 12, 2019 Share Posted April 12, 2019 DisPlus setting a stake at $7/mo or $70/year makes it nearly impossible for Netflix to raise prices again, IMO. So now, consider that if we enter a recession in the next 3-4 years, Netflix will still be needing to borrow for its content spend and refinance existing debt at higher rates as the bond markets tighten up. Given that, should the Ebitda multiple on Netflix be a little lower than 300+? Link to comment Share on other sites More sharing options...
rogermunibond Posted April 12, 2019 Share Posted April 12, 2019 As if Disney Plus investor day wasn't enough. The Star Wars IX teaser trailer dropped today at SW Celebration. Holy crap! Link to comment Share on other sites More sharing options...
Jurgis Posted April 12, 2019 Share Posted April 12, 2019 DisPlus setting a stake at $7/mo or $70/year makes it nearly impossible for Netflix to raise prices again, IMO. Tell that to my wife. 8) Netflix is not gonna be cancelled even if it goes to $20 per month. We likely won't sub DisPlus even at $7 per month. Opinions may change at any time and all that. Link to comment Share on other sites More sharing options...
rogermunibond Posted April 12, 2019 Share Posted April 12, 2019 Jurgis - how does NFLX price differentiate your household from the marginal household? In NA, there are about 20-30M household that have cable and NFLX. And then about 30M households that are BB only with NFLX. Link to comment Share on other sites More sharing options...
PatientCheetah Posted April 12, 2019 Share Posted April 12, 2019 As an adult, I do not want to watch PG rated shows all the time. Can't live with DisneyPlus solo. Link to comment Share on other sites More sharing options...
Jurgis Posted April 12, 2019 Share Posted April 12, 2019 Jurgis - how does NFLX price differentiate your household from the marginal household? In NA, there are about 20-30M household that have cable and NFLX. And then about 30M households that are BB only with NFLX. I don't know how our situation compares to others. We don't have cable. We have NFLX streaming, Amazon Prime and NFLX DVD service for new/not-available-on-streaming movies. I was for cancelling NFLX streaming, but was overruled. 8) However, if Amazon Prime starts showing more ads, I might change my mind and become pro-NFLX again. 8) Things may change a lot if/when NFLX DVD service shuts down. I'll have to think then how to get new/not-available-on-streaming movies. I think DVD service will be closed within 5 years. Edit: DIS movies were all on NFLX based on their agreement with NFLX. Once they are not on NFLX, I might get them through NFLX DVD service. I get some HBO content through DVD service. So DVD service is somewhat key factor in my decisions to subscribe or not subscribe to anything else. Link to comment Share on other sites More sharing options...
rkbabang Posted April 12, 2019 Share Posted April 12, 2019 DisPlus setting a stake at $7/mo or $70/year makes it nearly impossible for Netflix to raise prices again, IMO. Tell that to my wife. 8) Netflix is not gonna be cancelled even if it goes to $20 per month. We likely won't sub DisPlus even at $7 per month. Opinions may change at any time and all that. Same here. We just cancelled YouTubeTV which was raising its price to $50/month and got us thinking that we never even watch it. All we really watch in our house is Netflix, Amazon Prime, and regular youTube. Netflix is way under-priced IMHO. We wouldn't cancel it if it was $40/month. (I hope Reed Hastings doesn't read this). Link to comment Share on other sites More sharing options...
DooDiligence Posted April 12, 2019 Share Posted April 12, 2019 Doesn't ESPN+ just have like a ancillary things that aren't on one of the ESPN networks? The disney+ name is confusing/suboptimal to me, coming from that perspective. I think Disney + means pay more than the base sub rate & get more ;) Sports packages & PPV should drive add-on sales? MMA is like $5 a month extra & that alone should be worth a ton of subs. Premier League, La Liga & Bundesliga, hooty hoo! Cricket, why not? Big market for that & football (and I do mean real football where they don't touch the ball with their hands.) Link to comment Share on other sites More sharing options...
Spekulatius Posted April 12, 2019 Share Posted April 12, 2019 The investor day presentation is very well made. Now we have Disney+ for kids and teens (animations, Star wars, superhero’s , documentaries ) Hulu - regular streaming TV, competing with Netflix ESPN+ streaming for sports fans. Looks like investors may be good for another 20 years if this works out. Link to comment Share on other sites More sharing options...
glorysk87 Posted April 13, 2019 Share Posted April 13, 2019 Anyone else think the sub targets are aggressive? 60-90mm by the end of FY2024 when NFLX is at 60mm US subs today. Not particularly. Guidance implies 20 to 30m subscribers in the US by 2024. Doesn't seem aggressive at all tbh. Link to comment Share on other sites More sharing options...
rkbabang Posted April 15, 2019 Share Posted April 15, 2019 The investor day presentation is very well made. Now we have Disney+ for kids and teens (animations, Star wars, superhero’s , documentaries ) Hulu - regular streaming TV, competing with Netflix ESPN+ streaming for sports fans. Looks like investors may be good for another 20 years if this works out. I do like how they are separating things like that. In the old days of cable, and even these new live TV streaming services like Hulu live TV, youTubeTV, playstation vue, directv now, etc, you have to pay for sports even if you never watch them. This way you can pay for only what you intend to watch. Separating things into sports, children's programming, and everything else. It isn't completely pay per view, but it isn't everything all bundled together and you pay for it all whether you want it or not. I think this might be a winning move. Link to comment Share on other sites More sharing options...
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