Disney slides after CEO comments on guidance, streaming service

This blog was updated with Disney World Closure Information

During Bank of America Merrill Lynch’s Media, Communications & Entertainment Conference, Disney (DIS) CEO Bob Iger said that he expects the company’s 2017 earnings per share to be roughly in line with last fiscal year, sending the stock into negative territory.

The executive also said Marvel and Star Wars will go exclusively to the company’s upcoming streaming service.

GUIDANCE

Disney CEO Bob Iger expects the company’s fiscal year 2017 earnings per share to be roughly in line with last fiscal year.

In 2016, Disney reported adjusted earnings per share of $5.72, according to Bloomberg data. The consensus estimate for 2017 prior to Iger’s comments today was for 2017 earnings per share of $5.88, according to First Call.

“I think you have to look at the year as being roughly in line with an EPS basis that we delivered in fiscal ’16, and that’s for a few reasons, some, by the way, very topical. We mentioned all the way at the beginning of the year the impact of the NBA, big growth in cost to ESPN on the rights front. We also did not have a big Star Wars movie. […]

HURRICANE IRMA

In addition to that, we have had some impact already from Hurricane Irma. There, we’ve seen cancellations in Orlando, and we’ve also had to cancel three cruise itineraries and shorten a couple of others. Lastly, there will be some expense us in fiscal ’17 that are tied to the BAMTech acquisition,” the executive said during the media conference.

[youtube https://www.youtube.com/watch?v=Ki6q5KaGqrA?rel=0&controls=0&w=560&h=315]

Walt Disney World to close from Saturday until Tuesday or later – Walt Disney World will begin closing its theme parks from Saturday September 9 and “hopes” to resume normal operations on Tuesday September 12, the company stated in an update on Hurricane Irma posted to its website.

DISNEY STREAMING SERVICE

During the presentation, CEO Bob Iger also said that Marvel and Star Wars titles will go exclusively to the new Disney streaming platform, a service that is set to launch in late 2019.

“We’re going to launch it in late 2019. We’re doing that for two reasons. First of all, as we exit the Netflix (NFLX) output deal, we don’t get access to our theatrical release movies until the beginning of ’19. Secondly, we wanted time to actually develop and build up original programming for the platform. So late ’19, we’ll launch a Disney-branded service.

It will have — it will be the output distributor for the theatrical release movies. […] We’ve now decided that we will put the Marvel and Star Wars movies on this app as well. So it will have the entire output of the studio: animation, live action, Disney including Pixar, Star Wars and all the Marvel films,” he explained.

Additionally, it will also have four to five original Disney series as well as three to four exclusive Disney movies. “We are going to make less costly movies that are going to be on our proprietary service,” he said.

ESPN

Discussing the company’s ESPN sports network, Iger pointed out that he expects its own streaming service to launch sometime in the Spring, and that ultimately each user will be able to choose the events and sports he wants to watch.

“We will launch with 10,000 live sporting events that are not currently on ESPN’s linear channels. And those will include Major League Baseball, the National Hockey League, MLS, some other tenants and a lot of college in sports that we own the rights to already. […] It will be an ESPN app that exists today. Today, on that ESPN app, you can watch ESPN’s linear channels live authenticated. That will continue to exist. On top of that in the same app, you’ll be able to subscribe to, let’s call it, a plus service. You’ll be able to subscribe to significantly more sports programming than you get just through the linear channels. […] Over time, I think the way you have to look at this is this will be a sports marketplace platform.

You’ll be able to pick and choose over time what it is you want. It won’t necessarily be a one-size-fits-all. We may launch it that way, but the goal eventually is to create something that the sports fan can essentially use to design what their sports media experience can be,” Iger stated.

PRICE ACTION

On Thursday shares of Disney dropped about 4.4% to $97.06, while Netflix’s stock closed fractionally lower to $179.00.

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