>>> Walt Disney Q2 Earnings Call Notes

Walt Disney Q2 Earnings Call Notes (112.07 +0.65)
  • ESPN
    • Recognize early signs of shift in the industry, adapted quickly to a strategy that reflects the changing market.
    • ESPN content is featured in a growing array of services including Sling TV, PlayStation Vue, YouTube TV, Hulu.
      • Have seen really nice growth in different offerings, but it's nascent and the growth that they have seen in number of subs so far has not made up for the losses that they have seen in the expanded basic service.
    • In Q2 ESPN's suite of mobile apps reached a monthly audience of 23 million unique users who collectively spent 5.2 billion minutes engaging with ESPN on these platforms.
    • Mobile will play a key in the future of media.
    • Goal is to reach and engage consumer.
    • Very excited about success in new platforms, but live sports continue to draw huge audiences.
    • ESPN delivered largest Q2 prime-time audience in 5 years according to Nielsen.
    • ESPN's Q2 prime-time audience was up 15% y/y.
    • Participating in mobile by making moves on the personnel front. Looking at program changes overall to see how the networks are programmed with an eye on improving non live sports programming numbers.
    • Best thing co can possibly do is continue to make mobile experience great.
    • Has taken advantage of the shift to mobile from live programming, believes the money will follow.
    • Very candid 2 summers ago, this enabled the co to take a number of steps to deal with the issue in ways that serve the co well in the long-term.
    • New distributors have seen that launching w/out ESPN is very difficult.
    • New entrants into marketplace by Amazon (AMZN) and Facebook (FB) prove how important live sports is.
    • Guardian's of the Galaxy was the 15th consecutive Marvel release to reach #1 in the first weekend.
    • Doesn't see how many channels can be fit into a $10 bundle that would be attractive.
    • Q3 ad sales at ESPN are pacing down, however there is strong demand for the NBA inventory.
  • Studios
    • 4 Marvel releases in the next 14 months: Thor, Black Panther, Avengers Infinity War, and Ant-Man.
    • 2 $1 billion releases in 2017: Rogue One and Beauty and the Beast.
    • Will release Frozen 2 in 2019.
    • In December will release Last Jedi.
  • Construction underway on 2 new Star Wars Lands at Disney Land and Disney World.
  • In next few days Shanghai Disney will welcome it's 10 millionth guest. Better than expectations.
    • Modestly profitable during Q2.
    • Expects a loss in Q3 due to seasonality.
    • Expects to break even for the FY.
  • Increasing share repurchase target by $2bln.
  • Guidance
    • Modest growth to fiscal 2017.
    • Return to more robust growth in FY18 and beyond.
    • Expects FY17 cable programming cost will be up 8% driven primarily due to the new NBA contract.
    • Expects CAPEX for FY17 to be $200 mln lower than the prior year.
Shares of Disney are trading 2.1% lower in after hours trading at $109.70/shar