Walt Disney: Color on Quarter
* FBR Capital likes Disney's outlook, and they thought the Sept quarter was fine. But, in this time of heightened secular fears, one data point leaps out of the report, post-close Tuesday, November 6: Even Disney is seeing weak ad pacing. ESPN, right now, is pacing down low to mid single digits for the December Q. The ABC broadcast network, with the strongest trend in the non-sports broadcast audience this season, was down low single digits in the Sept Q. Pacing is a snapshot in time. For ESPN, in particular, this should turn around, with NBA ad sales pacing up 21% (and the NBA season just getting started), an NFL wild card game at the network for the first time this year, and college football playoffs launching this year. But the drumbeat of secular concern for the TV network group beats louder with each successive soft ad outlook; and, on the call, Disney CEO Bob Iger conceded that, at some level, digital is taking at least a modicum of share.
* Topeka notes after the close, DIS reported FQ4 2014 results. Revs came in at $12.39B, up 7.1% YOY, just missing their projection of $12.41B, on a slight shortfall at Consumer Products relative to our projections. Consensus revenues were $12.37B. On overall operating expenses which came in well below their models on a percentage of sales basis, particularly at Theme Parks and Consumer Products, segment EBIT was $2.78B, up 11.7% YOY, and edging their projection of $2.77B. They would qualify FY16 as a 'crescendo' year for the co given the Star Wars event, and the economic rent that comes with that, which will lift virtually all of DIS' businesses. With that, given near-certainty of a high-teens earnings profile in FY16, their target remains $97.
* Wunderlich notes that although shares of Hold-rated DIS were under some pressure after the market close following the FQ4 earnings release, they would use any weakness to accumulate shares for investors comfortable with the global macro position. There are 21 franchise tentpole movies to be released over the next three fiscal years, vs. just 13 over the prior three fiscal years, with Marvel IP remaining the most predictable bedrock.
* Needham notes DIS reported revenue of $12.389B (up 7% y/y and in line with our estimates), Segment Operating Profit of $2.775B (up 12% y/y and in line with their estimates), and Operating EPS of $0.89 (up 16% y/y and 2% above estimates). DIS reported results largely in line with analyst expectations for 4Q14. With regard to Capital Expenditures, mgmt guided to FY15 Cap Ex of ~ $4.8B, $1.5B above FY14 levels of $3.3B; Hold.
* DIS closed at an all time high last night but is now down 2% in the premarket.