- Disney started its direct-to-consumer (DTC) efforts in April 2018, launching the ESPN+ streaming service.
- Disney said it also plans to launch another DTC service, Disney+, in late 2019, and that it would remove all its movies from Netflix this year.
- Disney’s Direct-to-Consumer & International business will take a bite out of its earnings per share in the fiscal year 2020, but won’t put pressure on the stock value, according to analyst Todd Juenger at Bernstein.
- Watch Disney trade live here.
Disney‘s new direct-to-consumer (DTC) streaming business will take a bite out of its profits in the next few years, but that won’t stop its stock value from rallying, an analyst says.
“The (obvious) bullish view is: the downward revisions and DTC losses won’t matter to the stock,” said Todd Juenger at Bernstein in a note out on Friday.
Disney started its DTC service efforts in April 2018, launching the ESPN+ streaming service. ESPN+ hit $US1 million subscribers in September. The company also plans to launch another DTC service, Disney+, in late 2019.
Disney labelled these two services and other international channels as Direct-to-Consumer & International (DTCI). Disney disclosed in an SEC filing earlier this month that its DTCI division had lost $US738 million in operating income for the first nine months of 2018, on revenue of $US3.4 billion, though most of that came from the international channels.
“Disney will need to absorb around 10 years of cash outflows, before they will turn positive,” Juenger said. He estimated $US400 million of EBITDA in 2030 for the unit.
- UBS says investors are valuing Disney’s streaming assets at only 1/10 of Netflix, and it points to a big debate in the industry
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