DISNEY.
ASHLEY: I'M TRYING TO GET INTO
THESE NUMBERS.
GARY, IF I CAN BRING YOU IN
STUDIO.
ENTERTAINMENT, 3.84 BILLION.
IT WAS ESTIMATED 4.39 BILLION.
MISS ON MEDIA NETWORKS AS WELL.
WHAT'S YOUR INITIAL REACTION?
I'M SURPRISED?
>> BIG INITIAL REACTION IS
DISNEY IS USUALLY GOOD WITH
GUIDANCE.
THIS IS NOT JUST A BIG MISS.
IT IS A GARGANTUAN MISS COMPARED
TO WHAT THE NORM IS.
I'M SURPRISED IT IS NOT DOWN
MORE THAN 5%.
DISNEY HAS A BIG THINGS GOING.
"STAR WARS" LANDS ARE OPEN.
THE PARKS HERE ARE PACKED.
THE WAIT LINES ARE THREE HOURS.
BELIEVE ME I'VE TRIED WITH MY
GODDAUGHTERS.
BUT LOOK I THINK THERE IS SOME
ISSUES ON THE MEDIA FRONT.
I THINK WE HAVE A GARGANTUAN
BUBBLE IN MEDIA HOW MANY PEOPLE
ARE INVOLVED WITH DIFFERENT
COMPANIES AND DIFFERENT
STREAMING.
YOU KNOW THEY HAVE NOW GONE UP
AGAINST NETFLIX.
I HAVE TO LOOK AT THE NUMBERS.
ON THE WHOLE, NOT GOOD.
MELISSA: LET ME GIVE YOU SOME
DETAILS.
THEY SAY IN THE QUARTER
OPERATING RESULTS AT 21st
CENTURY FOX BUSINESS REFLECTED A
LOSS FROM DISTRIBUTION DRIVEN BY
PERFORMANCE OF THE DARK PHOENIX.
CHARGES TOTALING $207 MILLION
FOR SEVERANCE IN CONNECTION WITH
THE INTEGRATION OF
21st CENTURY FOX PARKS.
EXPERIENCE AND PRODUCTS REVENUES
FOR THE QUARTER, INCREASED BY
7%, TO 6.6 BILLION.
JAMES, LET ME ASK YOU, I MEAN
THE PARKS, WHERE ALL THE
STRENGTH IS.
WE JUST DID A DISNEY ADVENTURE.
ENTERTAINMENT WAS AMAZING BUT
PRICES MY GOD, IT IS LIKE
THEY'RE SELLING YOU FILET MIGNON
PRICES BUT THE FOOD IS LITTLE
BIT LIKE DAY OLD BREAD.
THE HOTEL ROOMS, NOT REALLY WHAT
YOU'RE PAYING FOR THERE.
I THINK THEY HAVE A BIG MARGIN.
FROM INVESTOR POINT OF VIEW IT
IS FANTASTIC.
BUT YOU LOOK FOR A LOT OF THAT
STRENGTH IN THE PARKS AND
EXPERIENCES.
WHAT DO YOU THINK, JAMES?
>> I WAS GLAD MY KIDS NEVER
ASKED ME TO GO THERE.
THE PRICES --
MELISSA: WHAT DID YOU TELL THEM?
IT BURNED DOWN?
HOW DID THEY EVER ASK YOU TO GO
THERE?
HOW DID YOU MANAGE THAT?
>> I GUESS LOOKING AT THESE
RESULTS, IT ALSO SEEMS OUR
PROPRIETOR DID NOT MAKE A BAD
DEAL.
WE'LL SAY THAT.
I ALSO THINK IN TERMS OF
GUIDANCE I DON'T KNOW IF IT'S A
MEDIA BUBBLE, BUT I THINK IF I
WAS A DISNEY INVESTOR I WOULD BE
ASKING A LOT OF QUESTIONS ABOUT
HOW MUCH ARE YOU SPENDING ON THE
NEW STREAMING AND HOW MUCH ARE
YOU GOING TO BE PAYING PER
EPISODE TO CREATE NEW TELEVISION
PROGRAMS?
HOW MUCH ARE YOU SPENDING TO
CREATE MOVIES?
I THINK THAT IS SOMETHING THAT
INVESTORS DO WANT TO KEEP AN EYE
ON, GIVEN THAT YOU MENTIONED,
THIS IS A VERY, VERY CROWDED
MARKET NOW IN STREAMING VIDEO.
ASHLEY: CYNTHIA, WE SHOULD
MENTION WE HAVE BIG "STAR WARS"
EVENT TOWARDS THE END OF THIS
YEAR, WITH THE RELEASE OF
ANOTHER MOVIE.
IT HAS BEEN A BLOCKBUSTER SEASON
UP UNTIL NOW FOR DISNEY, BETTER
THAN LAST YEAR.
ALL OF THIS CONTENT MUST SPELL
GOOD NEWS FOR DISNEY PLUS THE
NEW STREAMING SERVICE WE'VE BEEN
TALKING ABOUT I BELIEVE STARTS
AT 6.99 A MONTH, RIGHT?
>> IT DOES.
DISNEY PLUS IS CERTAINLY GOING
TO BE STOCKED WITH VERY
HIGHLY-BRANDED, HIGHLY MARQUEE
CONTENT.
WHAT WILL BE CHALLENGE FOR
DISNEY, AS THEY BUILD DISNEY
PLUS, NOT ONLY WILL THEY HAVE TO
INVEST IN A TON OF HIGH-END
CONTENT BUT THEY'RE SHIFTING
THEIR BUSINESS MODEL SO MUCH,
THEY WILL HAVE FOREGO LICENSING
REVENUE THEY WOULD PREVIOUSLY
HAD, NOW THEY WILL SHOW THESE
MOVIES ON DISNEY PLUS.
THEY DON'T HAVE A LOT OF WIGGLE
ROOM FOR MISSES LIKE THIS.
I THINK THIS IS GOING TO BE A
PRETTY BIG ONE THAT WILL
REVERBERATE FOR A WHILE AT A
TIME WHEN THE COMPANY HAS TO DO
A LOT OF INVESTING.
>> GIVE YOU COUPLE MORE DATA
POINTS.
REVENUE IN MEDIA INCREASED 21%.
TO 6.7 BILLION.
CABLE NETWORK REVENUE FOR THE
QUARTER INCREASED 24%, TO 4.,
SORRY, 4.5 BILLION.
CYNTHIA, LET ME TAKE UP THE
OTHER SIDE OF THAT BECAUSE EVEN
THOUGH THEY WILL BE STREAMING
THE MOVIES ON THEIR WEBSITE,
THAT IS FRACTION WHERE ALL THE
REVENUE COMES FROM, I KNOW,
BECAUSE I'M FORCED TO FIND SO
MUCH AVENGER GARBAGE, I CAN'T
BELIEVE IT.
WE'RE BUYING MORE TOYS, SHOES.
"STAR WARS," MY ENTIRE PAYCHECK
GOES TOWARDS THINGS THAT ARE NOT
THE ACTUAL MOVIE.
SO I DON'T THINK, MAYBE THEY'RE
GIVING UP THE STREAM FROM
SELLING THAT MOVIE TO OTHER
SERVICES, BUT, IT IS STILL, THEY
HAVE ALL THESE PRODUCTS ALL OVER
THE PLACE.
AND, YOU KNOW, YOU BRING THEM TO
DISNEY PLUS TO WATCH CONTENT,
THE MOVE WITH
21st CENTURY FOX GIVES THEM
MORE CONTENT TO PUT IN THE
STREAMING CHANNEL.
IT MAY BE A BUMPY RIDE TO GET TO
THE NEW MODEL BUT IN THE END, IT
FEELS LIKE A POWERHOUSE, WHERE
AM I WRONG?
>> THERE IS ABSOLUTELY NO
QUESTION THEY HAVE, THE NUMBER
OF BRANDS THAT THEY NOW HAVE
UNDER THE UMBRELLA IS TRULY
IMPRESSIVE BUT I WILL SAY THAT,
IF YOU TALK TO DISNEY FOLKS,
THERE HASN'T BEEN A REAL
CONSUMER PRODUCTS DRIVER SINCE
"FROZEN."
"FROZEN" WAS AN ENGINE DROVE FOR
A COUPLE YEARS.
SO THAT MAKES FOR SOME VERY
TOUGH COMPARISONS.
WE'RE SEEING THESE BIG GAINS IN
REVENUE FOR THE MEDIA DIVISION
BECAUSE THAT REFLECTS COMING
TOGETHER OF DISNEY AND FOX.
I THINK THESE NUMBERS WILL BE A
LITTLE LUMPY UNTIL WE LAP THE
ACQUISITION IN ANOTHER COUPLE
QUARTERS.
MELISSA: JAMES OR GARY, I THINK
BACK TO WHEN THEY BOUGHT THE
"STAR WARS" FRANCHISE.
I REMEMBER BEING ON THE AIR WHEN
THE ANNOUNCEMENT WAS MADE.
EVERYONE FELL OVER DEAD, HOW
GIANT THAT NUMBER WAS.
SORT OF WHO WILL GET INTERESTED
IN THAT AGAIN?
LOOK HOW THAT HAS PAID DIVIDEND.
RIGHT NOW LOOK AT DISNEY, YOU
WORRY ABOUT MAYBE WHAT IS GOING
ON WITH THE INTEGRATION.
COULD IT BE ANOTHER MOMENT LIKE
THAT?
>> ONE THING THEY'RE MAGNIFICENT
AT IS LEVERAGING THE NAMES AND
BRANDS.
THEY HAVE DONE IT MAG ANY OF
SENTLY THROUGHOUT THE YEARS.
I SUSPECT THEY CONTINUE GOING
FORWARD.
WHO KNOWS WHAT ELSE THEY PICK UP
GOING FORWARD.
BUT FOR ME AS A MARKET GUY, WHEN
I SEE A COMPANY LIKE DISNEY MISS
REVENUES FOR QUARTER, READING
$1.2 BILLION, THAT'S A LOT.
THAT MEANS EVERYBODY ON
WALL STREET HAS TO LOWER THEIR
NUMBERS GOING FORWARD.
SO I THINK FOR THE NEXT QUARTER,
WE'LL SEE A PRETTY WEAK STOCK.
WE'LL SEE WHAT DISNEY HAS TO SAY
ON GUIDANCE, AND WHAT'S TO COME.
AGAIN THEY HAVE BIG MOVIES
COMING OUT.
THEY HAVE THE "STAR WARS" LANDS
COMING OUT.
THERE WILL BE MORE "STAR WARS"
DOWN THE ROAD.