2024-05-07 16:09:52 ET
Summary
- The Walt Disney Company is expecting a down quarter for its Direct-to-Consumer business.
- However, the year-to-date DTC operating results trend shows significant improvement, with a $600 million improvement in one quarter and $1.5 billion in six months.
- The market is overreacting to the third quarter issues, but Disney management has likely resolved them so they will not transition to long-term problems.
- ESPN will transition to streaming. But ESPN will not be giving up linear.
- Disney Free Cash Flow increased roughly $3 billion YTD.
The Walt Disney Company ( DIS ) has made solid progress since the coronavirus shutdowns really threw the company a unique set of challenges. Additionally, the last article continued the coverage of a successful board fight (another challenge or distraction and expense management did not need), which meant that the company had a united experienced team. But the (upcoming) fiscal third quarter events will last one quarter, whereas the long-term outlook for a growing, cash-generating giant headed by an experienced team remains (along with a far higher stock price). It is far more important for this management and board as a team to implement the plan they have in mind while course-correcting as needed.
Bad News First
Management is basically expecting a down quarter for the Direct-to-Consumer, or DTC, business. Anytime an announcement like that happens, Mr. Market has a predictable reaction that looks like "losses everywhere forever." But no one ever stated that the path to profitability was straight up with no challenges along the way....
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Disney: Long-Term Progress Overshadowed By Q3 Guidance