Walt Disney Management Talks Fox, ESPN+, and Disney+

These are the most important narratives for Disney shareholders to watch in 2019.

Daniel Sparks
Daniel Sparks
Feb 11, 2019 at 7:01PM
Consumer Goods

Walt Disney's (NYSE:DIS) fiscal first-quarter results highlighted strong performance from the media giant. The period featured better-than-expected revenue and earnings per share, coming in at $15.3 billion and $1.84, respectively -- ahead of consensus analyst estimates of $5.1 billion and $1.55.

But given Disney's big plans for 2019, there's a lot more on investors' minds than the company's fiscal first-quarter financial performance. The company's recently launched ESPN+ streaming service, its pending acquisition of Twenty-First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA), and the upcoming launch of its Disney-branded streaming service remain the most critical narratives for investors to watch. This is why investors may want to look beyond Disney's fiscal first-quarter earnings release to management's quarterly earnings call, where key topics like these were discussed.

Here are three key quotes from the call.

A man using the ESPN+ app on his smartphone.

ESPN+. Image source: Walt Disney.

ESPN+ is growing rapidly

Walt Disney launched its first direct-to-consumer (DTC) streaming service last April. Based on its popular ESPN live sports brand, the subscription service gave subscribers access to content incremental to its existing network content for $4.99 a month, or $49.99 per year.

The service saw rapid growth right out of the gate, hitting 1 million subscribers in September -- about five months after its launch. Fortunately, this rapid growth has continued. Less than five months later, the service has surpassed another important milestone.

"ESPN+ now has 2 million paid subscriptions," said Disney CEO Robert Iger in the company's fiscal first-quarter earnings call, "double the number from just five months ago."

Check out all our earnings call transcripts.

Fox will "provide opportunities for growth"

Last July, Disney announced that its shareholders and Twenty-First Century Fox shareholders had both officially approved Disney's acquisition of a significant portion of Fox's assets. The assets to be acquired by Disney include Fox's film production business, National Geographic Partners, Fox's interests in Hulu (upping Disney's stake in the streaming service from 30% to 60%), and more. 

While the acquisition hasn't closed yet, this doesn't mean management isn't already thinking through how these new assets will benefit Disney.

"The addition of content and management talent from Twenty-First Century Fox will further enhance our DTC efforts and provide opportunities for growth across the company," said Iger. "Having already designed much of the integration process, we're prepared to start effectively combining our businesses as soon as we obtain regulatory approval from the last few remaining markets."


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Disney+ is a major initiative

The company's Disney+ streaming service, slated to launch in the second half of 2019, isn't a half-hearted effort, but a key part of the company's top priority: to build a robust DTC business.

Iger explained the company's commitment to launching quality content for its Disney+ service in Disney's earnings call:

We have a number of great creative engines across our company, all of which are dedicating their talent, focus, and resources to develop and produce strong content for the Disney+ platform. Most of the teams creating shows and movies for this service are the same innovators and storytellers driving the prolific success of Disney, Pixar, Marvel, and Lucasfilm, operating under the same expectations of excellence.

Investors will get to see a preview of the Disney+ platform at the company's investor day on April 11, Iger said. "We'll also take that opportunity to provide detailed insight into our overall DTC business," the CEO added.