Disney Loses More Ground

By Douglas A. McIntyre Updated Jul 31, 1:22PM EDT · Published Jul 31, 9:30AM EDT

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Disney Loses More Ground — © tvierimaa / iStock Editorial via Getty Images

Several yardsticks can measure the success or failure of Walt Disney Co. (NYSE: DIS | DIS Price Prediction) with respect to earnings. They are primarily theme parks, traditional TV media and cable content, and its streaming business. Even if streaming is a relatively small portion of the total financial picture, it is the one many investors watch most closely. And it is the investors’ worry that Disney may fall behind the competition, particularly Netflix and Amazon. (These companies have the worst reputations.)
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Disney has hinted its content networks are in enough trouble that they may not be part of the company’s future. ESPN is looking for strategic partners, which would likely bring Disney money. Theme parks have been a financial anchor for decades and will be in the future.
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CEO Bob Iger, who recently had his employment contract extended, was the architect of Disney+, the company’s largest streaming platform. It includes content from Disney, Marvel, National Geographic, Pixar and Star Wars. The smaller parts of Disney’s streaming portfolio are Hulu and ESPN+.

Disney’s most recent quarter showed Disney+ with 157.8 million subscribers. Wall Street expected 162 million. This was the second consecutive quarter in which Disney+ shrank. Disney+ launched at a price of $6.99 a month. It is now $10.99. However, some severe damage had been done. The low price point brought in subscribers but helped trigger billions of dollars in losses.
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At roughly 160 million subscribers and falling, Disney may never catch the industry leaders. Netflix has 238 million subscribers and is growing. Amazon Prime Video has over 200 million. It is also part of Amazon Prime, which with its additional services makes it particularly attractive to consumers.
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What is a fair comparison for Disney’s stock price? If it is a proxy, Netflix is the most direct one. Its shares are up 45% this year. Disney’s are down by 3%.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.