A chain is only as strong as its weakest superhero blockbuster... Disney just announced that revenues hit a record high of $20B (up 33%), but profit dropped 51% in the 2nd quarter. Now that Disney's officially acquired Fox and most of Hulu to add to the Mouse family, you have to take the good with the bad:
- The Good (mostly Disney): Avengers:Endgame became the best performer in movie history. And the ESPN and Discovery channels brought home big bucks.
- The Bad (mostly Fox): We're huge Wolverine fans, but the most recent X-Men movie missed (badly). Also, a tournament-worth of cricket matches got rained out, hurting Fox's international revenues. Now Disney wants to resurrect Fox's Home Alone.
Here's what Disney actually does... Mickey lives off of 4 profit food groups:
- Media Networks (33% of revenue): Things at Disney's many cable TV channels (includes ESPN and ABC) were solid.
- Parks, Experiences, and Products (31%): Attendance fell 3% at Disney's US parks, but per-tourist spending jumped 10%. Could be the disturbingly large turkey legs.
- Studio Entertainment (18%): Re-butter the popcorn for Disney's hits on hits on hits. The movie studio set a record $3.8B revenue.
- Direct-to-consumer (18%): The home of Disney+, the much-hyped new streaming network that arrives in November.
Disney+ doesn't need to make money... (that's its secret). The new Netflix rival just needs to feed the Disney profit beast. Disney makes money everywhere, and that gives it a huge advantage over Netflix.
- Netflix: $12.99/month, because Netflix has 1 product that needs to make all the profits.
- Disney+: Can charge just $6.99/month because the more fans that fall in love with Coco, the more Disney can make money on theme parks, toys, and shows covered in Coco.
PS: The CEO just announced the mega package of Disney+, Hulu, and ESPN+ will cost $12.99/month.
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