This week, The Walt Disney Company will host its fiscal first quarter earnings call to discuss financial results at the company for the months of October, November, and December 2022. It will be the first earnings call since Bob Iger was reinstalled as Disney’s CEO on November 20, replacing Bob Chapek. And as the day of the call approaches, predictions about what might be announced during that call have been “heating up.”
Among those gazing into their proverbial crystal balls is Vijay Jayant, a media analyst for Evercore ISI, who says that Disney will beat everyone’s expectations for its quarterly numbers. Jayant also says that Bob Iger will cut costs–enough that Wall Street and Disney’s investors will be pleased.
“There is an opportunity for Disney to use the current advertising downturn to take cost out of the linear business,” Jayant said.
According to Jayant’s estimates, if Disney follows NBCUniversal’s example and puts into motion a massive cost-cutting initiative, The Walt Disney Company could see a savings of more than $1.3 billion over the next few years.
“There is opportunity for Disney to improve studio results through a combination of rerouting some direct-to-streaming movies to theaters, better execution, and potential windowing changes,” Jayant explained. “We see an opportunity to improve studio results by about $500 million by returning the studio to 2020/2021 levels of profitability over the next five years.”
“We expect first quarter fiscal year 2023 results will take a backseat to management’s updated strategic and operational visions following the recent leadership change and ongoing proxy battle with an activist,” Maral said. “Given Bob Iger’s return as CEO was less than just three months ago, we assume the full contours of the new plan are still being shaped and could take more time to be fully articulated to investors.”
According to NextTV.com, Maral is looking “for a path to direct-to-consumer profitability, a company-wide cost transformation initiative, particularly at the linear networks, and upping operating income growth” at Disney.
Maral is interested in how Iger plans to restructure Disney’s media and entertainment division. Bob Iger recently said he wants creative executives to have more control in the company.
“From the outside, it’s sometimes difficult to appreciate what implications a profound shift like this might have on a company,” Maral said. “What does management expect?”
Maral also says it’s a good move for Disney to relinquish ESPN.
“Across linear, we think it would be a highly difficult and complicated process to separate ESPN from the rest of the company’s portfolio,” Maral explained. “Perhaps more importantly, we think Disney is still in the early days of tapping into the opportunity with streaming sports and the benefits of being able to drive the broader Disney direct-to-consumer bundle with Disney+ and Hulu.”
Maral predicts Disney’s report will include revenue of $23.3 billion for the quarter and operating income of $2.51 billion. Both figures are slightly lower than the general consensus. Maral also predicts that Disney+ will report an increase in new subscribers of 1.5 million. The consensus there is 2.2 million.