These are challenging times to be a Disney (DIS -1.16%) shareholder. The stock is out of favor, trading 24% lower than it was when it peaked 15 months ago. The media giant reports financial results for its fiscal fourth quarter after Thursday's market close.
Disney can go a long way to winning back the market's faith with a strong report, but it can also woo back investors if it says -- and means -- the right things. Let's go over a few things that would set the market's mind at ease following Thursday's report.
1. "We look forward to Toy Story Land in 2018 and Star Wars Land in 2019"
Theme-park attendance has been sliding at Disney World through the past two quarters, and Disneyland joined it on the downturn during the June-ending quarter. The turnstile also probably clicked less for the seasonally significant summer quarter, as we'll find out in a few days.
Disney has been slow to inject new rides -- the e-ticket caliber of attractions that have made it the world's largest theme-park operator -- and that decision has probably helped its visits fall short of the growth at rival Universal Orlando, with its aggressive expansion. Disney World will get the Pandora-themed land with two promising rides at Animal Kingdom by early next year, but the real gems will be the Toy Story Land and Star Wars Land that Disney began clearing space for earlier this year.
Disney has yet to announce an opening for either land, or for the Star Wars Land going up in Disneyland, after making the initial unveiling last year. Disney has a habit of dragging its feet. The last major expansion -- New Fantasyland at Florida's Magic Kingdom -- took more than three years. Animal Kingdom's upcoming addition was announced in 2011 and has been under construction since early 2014. This trend would seem to suggest that we're at least three years away either Toy Story Land or the more ambitious Star Wars Land.
Announcing a projected opening date for any or all of the highly anticipated openings would at least provide some relief from the sting of a third straight quarter of declining attendance levels.
2. "ESPN is more than just a subscriber growth story"
The defections continue at Disney's sports network, and third-party reports show that the cord cutting has intensified in recent months. Disney's media networks division continues to grow despite the sliding audiences for ESPN, Disney Channel, and Disney's other cable properties. The decline at ESPN is more problematic because it's such a major contributor to Disney's financial performance, but also because of its escalating content costs.
NFL ratings are sliding this season, and that's bad news for ESPN, with its contracts that inch higher with every passing year. Disney needs to rewrite the narrative. It needs to make investors appreciate ESPN's growing presence on streaming television services and other digital offerings. Disney would do itself a big favor if it could quantify ESPN's success.
3. "Our studio didn't peak with The Force Awakens"
Star Wars: The Force Awakens shattered box-office records, and as the seventh installment of the iconic sci-fi franchise, it's worth noting that Disney doesn't have just two more movies to milk out of its Lucasfilm acquisition before the Star Wars saga has been completed. Disney is spinning off new related franchises, starting with Rogue One that hits theaters next month.
Expectations for Rogue One are naturally lower than for Star Wars: The Force Awakens, but that won't be the case for spinoffs tied to more familiar franchise characters, including Han Solo and Boba Fett.
Disney has been killing it at the box office this year, responsible for four of the year's six biggest hits (and one of the two not put out by Disney, Deadpool, is a Disney-owned Marvel franchise). Comparisons will get challenging next month, when we're eyeing how the media giant kicked off fiscal 2016 with Star Wars: The Force Awakens, but anything Disney can do to remind investors how it has been feasting at the top of the box-office charts for the past couple of years and how it plans to stay there will help.