Disney earnings: What to expect from the media giant’s Q3 results

Yahoo Finance's Allie Canal joins the Live show to discuss third-quarter earnings expectations for Disney, subscriber guidance, and the future of streaming.

Video transcript

- Disney is set to report its third fiscal quarter earnings this evening with investors focused yet again on the media giant's streaming strategy and still optimistic for good subscriber numbers over at Disney+. Joining us with more is Yahoo Finance's Allie Canal. And Allie, well, I guess the positive is here is Disney will report a lot better things than Warner Brothers and Discovery did a couple of days ago.

ALLIE CANAL: Yes, absolutely. Yeah, the expectation is revenue should come in at around $21 billion adjusted EPS, $0.96 a share. And then you were mentioning those positive Disney+ subscriber numbers. Those coming in should be around 10 million. That's the expectation on Wall Street. And that's pretty sizable considering the competition, right? Netflix lost a million subscribers in its latest quarter. Peacock didn't add any.

But for Disney, they did roll out in some new markets. They have a pretty robust content slate that should take us to the end of the year with the premiere of "Obi-Wan Kenobi," for example, very recently. But a big question for investors is whether or not they're going to lower that subscriber [? guidance. ?] So Bob Chapek previously said that he expects to add around a significant amount of subscribers by fiscal 2024-- 230 to 260 total subs. But that's a pretty sizable feat considering the slowdown that we've seen across the board.

He also said at that time he expects the media business to be profitable. But Disney has hit a few hurdles. They lost the streaming rights to stream those cricket matches from the Indian Premier League. And that's by far the most popular sport in India. Disney+ Hotstar is the Indian brand, and they make up around 36% of total Disney+ subscribers, so could that trickle down and impact [? guidance? ?] So that will be a main question for investors.

- Yeah, I'm really curious also about what's going on at the parks right now, right? Because we have seen strength across travel, but I wonder how sustainable that is going to be?

ALLIE CANAL: Yeah, we did see a positive results from Comcast, that Universal theme park revenue jumping around 65%. But yeah, you're right. Especially with the recession risks looming, I think investors are going to want to get a little bit more clarity on how Bob Chapek plans to maintain that park momentum considering that there are signs of an economic downturn. How can you get people coming in, spending that money? They have rolled out different features to make it easier for guests coming to the parks, but that will also be a pretty main point on the earnings call too.

- I mean, there are so many facets to this company, whether it's the parks and resorts experience, whether it's the streaming side of the business. But it also comes back to, for the content that they do create, how you create merchandise around that content and ensure that it's going to get through to consumers.

How can you also, at the same time, make sure that you're getting advertisers on top of that content on some of their broadcast networks? Where do you think investors are going to be looking through this period and really monitoring any type of advertising spend pullback, or even for the end consumers, the discretionary spend pull back too?

ALLIE CANAL: Yeah, we have seen that ad slowdown across the board. I think investors really just want a clear strategy from Bob Chapek. Where are you going to take this company? He's talked about the metaverse. Could that be something that we could see? What about ESPN+? When are they going to go all in on that service? Hulu, same thing.

Comcast still owns a 33% stake. Is Disney going to eventually buy them out? So they're going to be looking for a very clear strategy because clearly cable television, the legacy media business, that is not the future. We've seen those revenues decline across the board. So what is the future? And I think that's what Chapek is going to really be scrutinized for.

- Well, enjoy that Disney earnings call.

ALLIE CANAL: Yes.

- Allie Canal, thanks so much.