Disney (DIS) shares fell About 2% on Friday in the wake of a fresh cut on Wall Street.
Macquarie analyst Tim Nollen downgraded the stock to Neutral from Outperform, citing declining linear networks, direct-to-consumer hurdles and a slowdown in the gardening business.
“We see near-term uncertainties impacting earnings, valuation, and sentiment,” Nolen wrote in a note published on Friday. “We continue to appreciate Disney’s efforts and expect its shift to streaming to be successful, but we see the stock as range-bound at the moment.”
Nolen, who also lowered his price target for the stock to $103 from $125, added that he’s concerned about Disney’s ability to reach streamlined profitability by 2024 — the company’s current goal.
It seems likely that Disney will buy 1/3 of Hulu at a price of perhaps more than $9 billion — this combined with a slower pace of subsidiary additions (Disney+ may already be losing Subs for the third consecutive quarter in F3Q) could result in higher DTC run losses. fiscal year exceeds 24″.
Shares of Disney experienced their biggest drop in six months after the media giant reported that Disney+ shed 4 million subscribers in a fiscal second. After the recent price hikes.
Stream losses narrowed to $659 million in the quarter — above consensus estimates of $850 million — from a loss of $887 million in the year-ago period. The company reported a $1.1 billion streaming loss in the first quarter and a loss of $1.5 billion in the fourth quarter.
Disney reiterated its plans to cut $5.5 billion in costs, which will include $3 billion in content costs. The company confirmed in its most recent earnings call that it will charge between $1.5 billion and $1.8 billion for twice the content amid plans to remove several series and specials from both Disney+ and Hulu.
Several titles, including Disney+’s “Willow,” “Big Shot,” and “The Mighty Ducks: Game Changers,” Deadline reported late Thursday. Along with Hulu’s “Dollface” and “Y: The Last Man,” they will both be removed from their services on May 26.
ESPN’s uncertain future, dangling Florida
Another problem for Disney is ESPN. Earlier this week, The Wall Street Journal reported that Disney is currently laying the groundwork to turn ESPN into a fully-fledged streaming service — something Disney CEO Bob Iger said would happen.
“at this point, [ESPN+] “It’s what I call a corporate or brand of ESPN’s flagship brand,” Iger said in March. Down the road, at some point, I think it’s inevitable…[ESPN] It will become a direct-to-consumer business.”
Nolin echoed Iger’s comments, writing in his diary, “The next Disney is probably the biggest decision I’ve made yet—not if, but when and how to put ESPN ahead.”
“Doing so is inevitable, and it’s hard to see how smooth it will be: the supposed huge losses in the pay-TV package would have to be compensated by aggressive subscriptions to subscribers with a supposedly high price, and even before Disney got there, it had to negotiate a deal.” conditions with pay-TV operators on content, and with unions on broadcast rights costs,” he warned. “We believe that the ongoing NBA renewal may be a catalyst for the future of ESPN OTT.”
Alexandra Channel He is a senior correspondent at Yahoo Finance. Follow her on Twitter @employeeAnd linkedin, and email it to [email protected]
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