Post by Conor Mac | Commonstock | Activist Report Against Disney $DIS

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Activist Report Against Disney $DIS

Thought this report from Train Partners titled "Restore the Magic" $DIS would be of interest to any Disney shareholders or observers.

Can find the presentation here.

Todor Kostov

@kostofff January 12

@investmenttalk Great!

Benjamin Tan

@consumeowntech January 12

The presentation does raise valid concerns about profitability, cost controls, and inherent value of Disney+. One should not rule out hubris when Iger made that aggressive bid for 21CF - he was on a roll with Pixar, Lucas, Marvel.

Reorientating $DIS to center around streaming does make sense in the world of DTC, but profitability appears to be dependent on many more subscribers above the guided 300-350mn range. See below my estimation of subs versus profits at Disney+, further comparing to $NFLX:

"Disney is targeting 300-350mn subscribers across Disney+, Hulu and ESPN by FY 2024. Extrapolating from the current revenue run-rate of $20bn with an average subscriber base of 230mn, this implies a potential annual recurring revenue base of $30bn by end of FY 2024, not dissimilar to where Netflix is today. Will it attain the same operating profit margin of 19.3% at that stage? Unlikely, given the breakeven guidance for the DTC business exiting FY 2024. Profitability will therefore have to depend on additional subscribers above the 300-350mn range guided. That is a lot of subscribers to bridge from the current 225mn to the promised land!"

https://www.consumeyourowntechinvesting.com/p/disney-20-iger-to-reclaim-the-magic

Conor Mac

@investmenttalk January 12

Author

@consumeowntech Solid thoughts Benjamin, thanks for sharing. Will read your report too!

Benjamin Tan

@consumeowntech January 12

@investmenttalk cheers Conor !

Joshua Simka@tomato January 13

@consumeowntech I shy away from the comparisons between Disney and Netflix because it's not apples-to-apples. Disney has a different and much more diversified business model. In my opinion, Disney has managed to build up Disney+ much more quickly than many were thinking and it's certainly no surprise that that would be expensive.

Benjamin Tan

@consumeowntech January 13

@tomato From 0 to 164 million subscribers in 3 years was going to be expensive indeed ! But DTC is also an existential pivot that $DIS has to make

Joey Hirendernath@joeyhirendernath January 12

I know @scorebdinvestor @theglobalcapitalist @christian7621 @wall_street_deebo would appreciate this

Christian

@christian7621 January 12

@joeyhirendernath have not gotten a chance to go through it yet but thank you for the tag. I’ve been very vocal about Disney and Iger on here so this should be a very interesting perspective. Disney pretty adamant about them not being on the board though

MT Capital

@mt_capital1 January 12

This was great, thanks Conor!

Conor Mac

@investmenttalk January 12

Author

@mt_capital1 Pleasure sir, digging the new pp!

Brett Schafer

@ccm_brett January 12

Great find, excited to give it a read

Conor Mac

@investmenttalk January 13

Author

@ccm_brett Pleasure!

Rihard Jarc

@rihardjarc January 13

$DIS needs to be run much better. The value, brand and assets they have is one of the best in the business, but the stock price hasn't reflected that for so long that it needs something to change.