VALUATION HIGHLIGHTS

1. Experiences constitutes 47% of the Trefis price estimate for Disney's stock.
2. Entertainment constitutes 34% of the Trefis price estimate for Disney's stock.
3. Sports constitute 18% of the Trefis price estimate for Disney's stock.

WHAT HAS CHANGED?

1. Disney's Q4 Fiscal 2024 Earnings

Disney posted a better-than-expected set of Q4 FY'24 results. Revenues grew 6% year-over-year to $22.6 billion while adjusted earnings were up 39% to $1.14 per share. Growth was driven by the entertainment business, which saw stronger box office receipts and improved the performance of the direct-to-consumer segment.

Note:FY'24 ended on September 28, 2024.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

The drivers mentioned below are some of the most important and sensitive drivers of Disney's value.

• Experiences Revenue: Disney's Experiences revenues rose from $28.1 billion in FY'22 to about $32.55 billion in FY'23, as attendance and average visitor spending at the company's U.S and international parks soared. Trefis expects the metric to grow to about $45 billion by 2030. However, if sales only grow to about $38 billion, our price estimate could be a 10% downside.

For additional details, select a driver above or a division from the interactive Trefis split for Disney at the top of the page.

BUSINESS SUMMARY

Disney is a diversified media company and makes money through several businesses, including cable networks, broadcasting networks, theme parks & hotels, filmed entertainment, and consumer products. The company has also recently added a direct-to-consumer business to its portfolio.

Its cable networks include ESPN, the Disney Channel, ABC Family, and others. Disney's broadcasting arm, ABC Network, is one of the biggest broadcasting networks in the U.S., with a wide viewership.

Besides TV networks, Disney boasts several theme parks and resorts that attract millions of visitors every year. Furthermore, the company leverages its famous characters and brands to sell various merchandise. Its filmed entertainment unit produces and distributes movies under the Disney Studios brand.

SOURCES OF VALUE

We believe that Disney's Experiences business is its most valuable business, given its high revenue base and stronger growth, particularly post the Covid-19 era.

KEY TRENDS

Disney's pivot to streaming

Disney has doubled down on the streaming space with the launch of its Disney+ offering in late 2019. While competition in the streaming market is intense, Disney's deep library of legacy content and popular franchises such as Star Wars and Marvel could give it an edge over rivals. Disney is also investing heavily in content specific to its streaming businesses. Although the streaming business is loss-making currently, it could provide Disney with recurring profits in the future as it builds scale.

Increasing Pay TV Competition

Increasing competition among pay-TV providers, such as Comcast, Time Warner, DirecTV, AT&T, and Verizon, is favorable for media companies, including Disney, which can gain negotiating power in discussions regarding the pricing of subscription fees for their programming content.

Increasing Sports Programming Costs

ESPN increases its fee per subscriber every year, owing to a rise in sports programming costs which have become a cause of worry for pay-TV service providers. Some of them are considering dropping ESPN from lower-priced programming packages.

Online Licensing & Broadcast Advertising

With the growth of online streaming companies such as Netflix, which monetize older content primarily, licensing opportunities have expanded for media companies. However, given a decline in traditional television viewership, ratings are hit hard, resulting in lower advertising revenues for most media companies. So far, licensing revenue growth has not completely offset the declines seen on the advertising front. Having said that, broadcasting networks such as FOX, CBS, NBC, and ABC have been able to contain the advertising decline due to their exposure to sports programming, which garners very high viewership and better ad pricing.