What's Driving Growth for Disney?
Speakers
Geetha Ranganathan
— Bloomberg Intelligence media analyst
Summary
Bloomberg Intelligence's Geetha Ranganathan discusses Disney's strong fiscal Q3, driven by theme park profits and streaming momentum. She highlights new CEO Josh Tomorrow's strategic moves and the unique ecosystem advantage. Paramount's outlook is weighed down by merger delays, heavy dilution, and rising leverage.
- Disney theme parks delivered 20% profit growth, calming demand fears.
- Streaming profitability beat for a second straight quarter, positioned as a growth catalyst.
- CEO Josh Tomorrow is restructuring: selling stakes, buybacks, TikTok deal, and building a Disney+ hub.
- Disney's unique assets (parks, studios, ESPN sports) create unmatched engagement.
- Paramount's Skydance merger faces long delays and $1.3B in ticking fees.
- Paramount's leverage to hit ~6.5x and massive dilution looms, with share count potentially quintupling.
Ideas
Parks, streaming, and ecosystem drive Disney.
Disney's theme parks remain the crown jewel with profits up 20%, allaying slowdown fears seen at Comcast's Universal parks. Streaming is the growth catalyst, with second straight quarter of better-than-expected profitability and more growth levers ahead. New CEO Josh Tomorrow is taking strategic actions: selling stakes, deploying cash to buybacks, TikTok deal, and positioning Disney+ as a major hub akin to Amazon Prime for the Disney ecosystem. Disney's unique combination of parks, movies, and ESPN sports rights creates a powerful engagement differentiator versus peers.
Paramount burdened by dilution and leverage.
Paramount faces a very discouraging investment outlook. The Warner Bros. Discovery merger is delayed, triggering $1.3 billion in ticking fees to be funded by share issuance. Leverage will be about 6.5x at close and massive dilution is expected—shares outstanding could balloon from 1 billion to almost 5 billion. The overall picture is not encouraging for investors.
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Speakers: Geetha Ranganathan · Tickers: DIS, PARA