Disney to Report Earnings Following Successful Activist Investor Challenge

(NYSE: DIS) is scheduled to announce its fiscal second-quarter earnings before the market opens on Tuesday. This will mark its first earnings report since successfully navigating a high-profile proxy fight with activist investor Nelson Peltz.
After CEO Bob Iger’s restructuring of the company into three core business segments – Disney Entertainment, Experiences, and Sports – analysts are keen to assess the impact of these changes on Disney’s financial performance.

Here are the consensus estimates compiled by Bloomberg:

Total revenue: $22.10 billion compared to $21.82 billion in Q2 2023 Adjusted earnings per share: $1.10 compared to $0.93 in Q2 2023 Entertainment revenue: $10.31 billion Sports revenue: $4.33 billion Experiences revenue: $8.18 billion Disney+ subscribers: 4.71 million compared to a loss of 4 million subscribers in Q2 2023

Disney’s stock has surged approximately 30% since the beginning of the year, outpacing the S&P 500’s 10% rise during the same period. This surge follows improved financials and several strategic announcements made by the company in February, just before its proxy fight victory. The announcements included a dividend increase, a new share repurchase program, and confirmation of meeting or surpassing its $7.5 billion annualized savings target by the end of fiscal 2024. Additionally, Disney disclosed a $1.5 billion investment in Epic Games and revealed plans for a joint venture partnership with Fox and Warner Bros. Discovery in sports streaming.

While sentiment has improved, analysts remain cautious about significant financial outlook changes. There’s particular interest in Disney’s sports streaming plans, especially regarding ESPN OTT. Reports suggest Disney has agreed to increase its media rights deal with the NBA to $2.6 billion, up from $1.5 billion previously. This renegotiation comes as the NBA’s current rights deal expires at the end of next season.

The market will also watch for subscriber growth, especially as Charter cable subscribers begin receiving complimentary Disney+ subscriptions. Disney anticipates adding 5.5 million to 6 million core Disney+ users in the second quarter, with Wall Street estimating slightly under 5 million. Moreover, Disney expects continued growth in average revenue per user, driven by recent price increases and efforts to curb password sharing. These factors are anticipated to contribute to a profitable streaming business by the fourth quarter.