As Cord Cutting Takes Hold, Disney Investors Must Face Their Biggest Challenge Yet

TL;DR

Disney's media networks division, especially ESPN, is losing subscribers at a faster rate than expected, causing concern for the company's growth.

Transcript

Sean O’Reilly: We’re talking Walt Disney subscriber troubles on this Consumer Goods edition of Industry Focus. Greetings Fools, I am Sean O'Reilly joining you here from Fool headquarters in Alexandria Virginia. It is Tuesday, December 1, 2015 and joining me to talk all things consumer goods is the man whose picture is next to awesome in the diction... Read More

Key Insights

• 🛍️ Online sales, particularly on smartphones, are becoming increasingly important during the holiday shopping season.
• 😃 The decline in subscribers for Disney's media networks division, especially ESPN, is a cause for concern as it is the company's biggest business segment.
• 🎥 The success of upcoming projects, such as the opening of Shanghai Disney and the release of Star Wars and Marvel movies, will be crucial for Disney's growth.
• 🙈 Disney's consumer products segment, driven by popular movie franchises like Star Wars, has seen significant growth in operating income.

Questions & Answers

Q: What was the overall trend in sales during Thanksgiving and Black Friday?

Sales during Thanksgiving and Black Friday decreased by 11% from the previous year, with foot traffic being generally down across all stores.

Q: What percentage of online sales during the holiday weekend were made on smartphones?

Around 40% of online sales during the holiday weekend were made on smartphones, indicating the growing importance of mobile shopping.

Q: Which segment of Disney's business is experiencing the most significant subscriber losses?

Disney's media networks division, especially ESPN, has been experiencing significant subscriber losses over the past two years, with 3 million subscribers lost in the past year alone.

Q: What factors have contributed to the decline in subscribers for Disney's media networks division?

The rise of cord-cutting and the increasing availability of online streaming services have contributed to the decline in subscribers for Disney's media networks division.

Summary & Key Takeaways

• Sales from Thanksgiving and Black Friday fell by 11% from the previous year, with foot traffic being generally down across all stores.

• Online sales, particularly on smartphones, accounted for a significant percentage of the total sales during the holiday weekend.

• Disney's media networks division, including ESPN, has been losing subscribers, which has impacted revenue and profits for the company.