What's going on?
Walt Disney was the most magical place in the world on Friday – the entertainment and media company’s stock rose 2% following better-than-expected quarterly results. All beauty, no beast.
What does this mean?
Disney’s quarterly sales increased by 12% beyond the same time last year, beating analyst expectations, while profit rose by 33%. The good news can be credited to Mouseketeers flooding its theme parks during the summer months and gluing their eyes to Marvel movies like Ant-Man and the Wasp.
The house of Mouse has Netflix and Amazon Prime in its sights with its own streaming platform, Disney+. The service will be launched in the US late next year and will include film, TV and online content from 21st Century Fox, too – which Disney recently bought for $71 billion.
Why should I care?
For markets: Fox’s final flourish.
On Wednesday, Fox shared its own earnings – and they were a mixed bag. While its film division didn’t do as well as hoped, it was partly offset by the attraction of the World Cup and the US midterm elections, which helped to drive advertising growth in its cable division. It’s this unit of Fox’s business that excites Disney’s investors as it complements Disney’s already buff entertainment offering. At a time when Americans are killing their cable subscriptions and spending more time online, older media companies like Disney probably need to adapt, or risk irrelevance.
The bigger picture: No one is perfect.
Fox is paying off in Disney’s den, but the same can’t be said for the company’s other digital bets. Disney wrote-down its investment in Vice Media (i.e. it slashed its assessment of what the company’s worth). Since sales growth had stalled at the former punk magazine, and profit was still a pipe dream (the company’s trying to cut costs), Disney decided to lower its valuation of Vice by almost $160 million.