DIS - Disney

[Jurgis]

 

They've been doing that since Ep. 1. and the crowds are not thinning.  ::) ;)

 

In fact the prequelists are making a strong comeback.  So many younger SW fans grew up with the prequels that the overall fandom has lost much of it's hate for the prequels.

 

Strong is the power of the dark side.  ::)

[SHDL]

On the prequels, there was a fan video on YouTube that talked about why they’re “secretly brilliant,” which I agree with.  To me Ep. 8 was interesting in part because of how it subtly doubled down on that theme. 

[LC]

 

They've been doing that since Ep. 1. and the crowds are not thinning.  ::) ;)

 

In fact the prequelists are making a strong comeback.  So many younger SW fans grew up with the prequels that the overall fandom has lost much of it's hate for the prequels.

 

Yes this is such an interesting phenomenon (from someone who grew up with the originals) - but hey, childhood movies are a great thing so I won't judge!

[bizaro86]

New Drone Footage from Star Wars: Galaxy's Edge

 

https://v.redd.it/tp899bh1nvk21/DASH_720

 

I'd go to see that if I could pay 2x and have 1/5x of the crowds...  ::)

 

 

(Based on published articles DIS has not disclosed yet how they gonna control traffic. Most expected solutions are not what I'm asking for.)

 

That doesn't seem like a good value proposition for DIS to me... if people were willing to pay 10x the price for 1/5th the crowds that would be potentially interesting.

 

There are a few options to trade cash for access - the "private tours" include front of the line access, for example.

[Jurgis]

New Drone Footage from Star Wars: Galaxy's Edge

 

https://v.redd.it/tp899bh1nvk21/DASH_720

 

I'd go to see that if I could pay 2x and have 1/5x of the crowds...  ::)

 

 

(Based on published articles DIS has not disclosed yet how they gonna control traffic. Most expected solutions are not what I'm asking for.)

 

That doesn't seem like a good value proposition for DIS to me... if people were willing to pay 10x the price for 1/5th the crowds that would be potentially interesting.

 

I am looking for good value proposition for me, not for DIS.  ;D

 

There are a few options to trade cash for access - the "private tours" include front of the line access, for example.

 

Yes. Front of line access does not eliminate the crowds.

[DooDiligence]

how they gonna control traffic

 

By offending a big chunk of their fan base with Ep. 8.  ;)

 

Why doesn't SMF's text editor have a "laughing while crying" emoji?

[bizaro86]

LOL - nice! Maybe try disneyland Paris in the winter?

 

You're right that front of the line access doesn't eliminate crowds, just waits. For lower crowd options, you can stay in a Disney owned hotel and get an extra hour early access. Crowds are lower then. Another option is to attend one of the separate ticket parties. (Mickeys not-so-scary Halloween party). While the hoards are lined up for the special stuff associated with the event, the "regular" park experience is very empty.

 

Naturally these options all include extra payments of various kinds to DIS.

 

My other suggestion would be to go to DL in early May this year. With Star Wars coming shortly after a seasonally slow time is likely to be even slower. I went to DL 3 weeks before Cars land opened - it was great.

[Jurgis]

LOL - nice! Maybe try disneyland Paris in the winter?

 

You're right that front of the line access doesn't eliminate crowds, just waits. For lower crowd options, you can stay in a Disney owned hotel and get an extra hour early access. Crowds are lower then. Another option is to attend one of the separate ticket parties. (Mickeys not-so-scary Halloween party). While the hoards are lined up for the special stuff associated with the event, the "regular" park experience is very empty.

 

Naturally these options all include extra payments of various kinds to DIS.

 

My other suggestion would be to go to DL in early May this year. With Star Wars coming shortly after a seasonally slow time is likely to be even slower. I went to DL 3 weeks before Cars land opened - it was great.

 

Thanks for suggestions, I'll keep them in mind. Although I was talking about Star Wars: Galaxy's Edge in specific, so some of the suggestions won't work.  8)

[Liberty]

https://redef.com/original/nine-reasons-why-disney-will-succeed-and-why-four-criticisms-are-overhyped

[Sportgamma]

https://redef.com/original/nine-reasons-why-disney-will-succeed-and-why-four-criticisms-are-overhyped

 

What a great read.

[Spekulatius]

Good timing. I added a few shares today and I am likely to add more on weakness. I think they will pull something off going directly to the customer, as they have multiple vectors to do so - via streaming  presence and physical properties (parks). I think at the very least, they can create an HBO like business going the direct route. I don’t think they will be able to beat Netflix in subscriber growth, nor do they have to. The market assigns high multiples to a subscription business, which I think Disney strives to become, rather than being transaction driven.

[DooDiligence]

20 years from now I expect to still own Disney, Berkshire, Edwards & Novo.

[thowed]

Thanks for the read.  V interesting.

 

I like Disney a lot, and especially Iger.

 

Without knowing his successor, I worry a bit about the next era, as iconic bosses are often hard to follow and can lead to share price droops.

 

I also think one has to remember that it is not a given that Disney will always be 'loved'.  If you look back to the 80s, Disney was looking pretty tired.

 

Just because everyone loves Marvel and Star Wars now, that won't necessarily  - the next generation of children may want to differentiate themselves, and have their own 'Universe'.  They may think that something like Star Wars - which both their parents AND grandparents like - is pretty lame.

 

As I say, I really like the company, but I want to always think about the possible dangers, especially if they're not priced in.

 

[Spekulatius]

Disney is going to have to reinvent themselves every generation and I expect the same will be true in the future. Right now, they are going through a transformation, but they do proactively  and from a position of strength.

Back in the 80‘s, Disney was an asset play, based on the value of the replacement value of their theme parks.

[rogermunibond]

The parts about upcross-selling and LTV capture are interesting.  Disney has had DisneyLife in UK and Ireland for some years now.  Basically a subscription service for kids/families - it's never gotten huge but been a useful test ground for OTT.  I'm sure that Disney has some interesting data on UK and Ireland parks visitation from DisneyLife subs, consumer product purchases, marketing for movies etc.  It's possible the D+ will allow for wholesale upcross selling.

 

I often feel the ultimate upcross-sell for Disney would be to allow people to live in their parks.  Imagine, being a resident of Galaxies Edge, what would someone pay for a two week stay in the park, in that milieu.

 

Alternatively, if Matt Ball's metaverse thesis for Fortnite is right.  Then AR/VR in a Disney simulation.

[Jurgis]

People praise Iger, but the last 10 year revenue growth is only 6% annualized. This is starting in 2009 pretty much at the bottom. Even hated companies like DISCA/AMCX have higher revenue growth (13% annualized or so). OK, maybe I should look at 2007 to now just to see top-to-top numbers. But still DIS growth is very subpar for a company that has huge brand and tailwinds for most of the last 10 years. Maybe this explains why they had to buy Pixar/Lucas/Marvel/etc. Even with these purchases, growth is still meh.

[villainx]

People praise Iger, but the last 10 year revenue growth is only 6% annualized. This is starting in 2009 pretty much at the bottom. Even hated companies like DISCA/AMCX have higher revenue growth (13% annualized or so). OK, maybe I should look at 2007 to now just to see top-to-top numbers. But still DIS growth is very subpar for a company that has huge brand and tailwinds for most of the last 10 years. Maybe this explains why they had to buy Pixar/Lucas/Marvel/etc. Even with these purchases, growth is still meh.

 

Off memory, the main problem had been tv/cable/ESPN/etc., any plus was weighed against a subscriber loss negative.  So ... I don't think things have been clearer since these many years, there's potential, but it hasn't been solved. 

 

So, you are right, but they things that have been going well, have - I assumed - gone even better, the things that have been a concern, hasn't been proven to be addressed.

[Jurgis]

People praise Iger, but the last 10 year revenue growth is only 6% annualized. This is starting in 2009 pretty much at the bottom. Even hated companies like DISCA/AMCX have higher revenue growth (13% annualized or so). OK, maybe I should look at 2007 to now just to see top-to-top numbers. But still DIS growth is very subpar for a company that has huge brand and tailwinds for most of the last 10 years. Maybe this explains why they had to buy Pixar/Lucas/Marvel/etc. Even with these purchases, growth is still meh.

 

Off memory, the main problem had been tv/cable/ESPN/etc., any plus was weighed against a subscriber loss negative.  So ... I don't think things have been clearer since these many years, there's potential, but it hasn't been solved. 

 

So, you are right, but they things that have been going well, have - I assumed - gone even better, the things that have been a concern, hasn't been proven to be addressed.

 

Just to note, I compared to DISCA/AMCX because these should have more problems than DIS with cord-cutting/sub losses...

[LC]

I think they had problems on the transition of media consumption:

 

-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.

 

-Similarly they have not been able to leverage their assets as effectively via TV broadcasting, again as consumers move from TV to streaming subscriptions.

 

I think their Disney+ service will probably need to be financially supported for a year or so (akin to Hulu's launch). But I think on the balance of probabilities, it will be the way forward for DIS.

 

All in all, they are great content producers but have been slow to keep pace with distribution changes. I will probably pick up some shares today on weakness as Spek mentioned.

[Liberty]

People praise Iger, but the last 10 year revenue growth is only 6% annualized. This is starting in 2009 pretty much at the bottom. Even hated companies like DISCA/AMCX have higher revenue growth (13% annualized or so). OK, maybe I should look at 2007 to now just to see top-to-top numbers. But still DIS growth is very subpar for a company that has huge brand and tailwinds for most of the last 10 years. Maybe this explains why they had to buy Pixar/Lucas/Marvel/etc. Even with these purchases, growth is still meh.

 

A megacap growing revenues at 2-3x GDP isn't bad. EPS seems to have been growing at mid-double-digits during the period, and they're well positioned for future growth with a large moat, great ROE and ROIC. They're well positioned for long-term future growth.

 

It's more a case of high terminal value and predictability. Just a different risk-benefit profile than some of the other things you're looking at, probably.

[Jurgis]

People praise Iger, but the last 10 year revenue growth is only 6% annualized. This is starting in 2009 pretty much at the bottom. Even hated companies like DISCA/AMCX have higher revenue growth (13% annualized or so). OK, maybe I should look at 2007 to now just to see top-to-top numbers. But still DIS growth is very subpar for a company that has huge brand and tailwinds for most of the last 10 years. Maybe this explains why they had to buy Pixar/Lucas/Marvel/etc. Even with these purchases, growth is still meh.

 

A megacap growing revenues at 2-3x GDP isn't bad. EPS seems to have been growing at mid-double-digits during the period, and they're well positioned for future growth with a large moat, great ROE and ROIC. They're well positioned for long-term future growth.

 

It's more a case of high terminal value and predictability. Just a different risk-benefit profile than some of the other things you're looking at, probably.

 

Berkshire managed to grow 8% annualized. And that's the ez pick.

 

How about CMCSA? 12%.

[LC]

To be fair, Disney managed to double net margins from 2011-2018, from ~11% to ~21%.

 

Comcast went from 9% to 12% over the same timeframe.

 

I'd take that as a sign that while management admittedly failed on the top line (namely ESPN and the factors I mentioned above), they did good work on the bottom line.

[KCLarkin]

Berkshire managed to grow 8% annualized.

 

Disney total returns were significantly better than BRK over that period. BRK retains 100% of earnings, so it should grow faster than a company that is paying a dividend and buying back shares.

 

According to Valueline, DIS per share growth was:

Rev 7%

Earnings 12.5%

Dividends 17.5%

 

Add in the dividend and you got a very nice return from a blue chip stock. Iger might not deserve the praise, but Disney sure does.

 

--

Revenue growth isn't a great metric to evaluate management anyway. Many great managers unlock value by shrinking business. Many great managers destroy value by growing their businesses.

[Jurgis]

Many great managers unlock value by shrinking business.

 

There are maybe couple people who did that, but mostly this is just an excuse for either crappy management or crappy business or both.

 

I agree that revenue growth is not everything, but low/zero revenue growth and squeezing margins is also at least yellow flag for me.

[bizaro86]

:

 

-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.