Disney (DIS) Stock Down on Lower Fourth-Quarter Subscriptions Forecast
By: TheStreet | September 21, 2021
• Disney's CEO warns that COVID-19 related headwinds will have an impact of subscription growth.
Disney (DIS) shares declined Tuesday after the entertainment giant's top executive reportedly said fourth-quarter streaming subscription growth would be lower than expected due to headwinds related to the COVID-19 pandemic.
Shares of Disney were down 4.2% to 171.17 at closing.
CEO Bob Chapek said Disney expects to add “low single-digit millions” of streaming subscribers in the fourth quarter, according to CNBC.
Chapek, who made his comments at the virtual Goldman Sachs Communacopia Conference, said “mobilizing partners” in Latin America to push Disney’s new Star+ streaming service, the COVID-19-related suspension of the India Premier League, whose games air on Disney’s Hotstar, and production delays from the Delta variant have all hurt subscriber numbers.
We are going to see a little bit more noise than maybe the Street projects quarter to quarter,” Chapek said. “The resurgence of Covid and Delta did impact some of our productions."
His forecast is significantly lower than some analyst estimates.
Disney has projected 230 million to 260 million Disney+ subscribers by 2024. The company said in August that it had 116 million Disney+ subscribers.
Chapek said that global production delays will be “very short term." But he noted that there won’t be as much new programming in the fourth quarter “than we might have expected,” which will have an impact on subscriber growth.
When asked about plans to reinstate dividends and share buybacks, Chapek said, according to the Fly, that "once we get to a point where...our cash flow is funding that, handling some of the debt that we've got, then it would be a great thing to reinstate that dividend and do share buybacks."
"But that's sort of in the distant future, and we're not going to entertain doing that until we can reach that single A level and we have clear sailing from here and this pandemic is in the rearview mirror," he said. Read Full Story »»» DiscoverGold