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Disney (DIS), a media business that competes with Viacom (VIA), CBS (CBS), News Corp. (NWS), and General Electric's (GE) NBC Universal, will be talking up its fourth-quarter numbers on Thursday after the bell. Are you a shareholder? If so, are you excited? Well, don't get too excited, because we might not be getting any growth, even if the Mouse beats on the bottom line. According to Earnings.com, the call is for 40 cents per share versus the 43 cents per share made in the comparable period.
You know what, though? For the most part, I'm not so concerned with exactly how much Disney makes this quarter. I'm a shareholder, and I want to see management at least come in at the estimate, of course, but I'll be more interested in the conference call. Way more interested this time around, in fact.
Disney is, in many ways, surrounded by a fascinating set of circumstances. It's suffering through a recession, yet, by its own admission, there are problems that need solving that are not the fault of the recession whatsoever. And those problems center on content distribution.
Movies are expensive investments, and Disney has not done well with them in recent months (the latest example: A Christmas Carol). Executive changes at the company's studio division will hopefully help out, but I have my doubts. What, exactly, will change? We hear all the time about Disney wanting to become increasingly conservative with its movie model, only to wake up one morning and find out that CEO Bob Iger has decided to buy out Marvel Entertainment (MVL) at a premium. Yep, Mickey Mouse isn't cool any longer. Bring on Spider Man!
The DVD industry is terrible. Growth in home entertainment is essentially gone. How best to cope with that? What should online distribution paradigms look like? Should they be based on subscriptions, or support via advertising? There are many questions Iger must answer, and he's got to offer solutions that center on organic growth initiatives and not exclusively on external acquisition concepts.
Besides content issues, I'm looking forward to the full-year statement of cash flows and the state of the theme parks. And I'll want to hear comments about what management thinks of the holiday season -- will it be a good one for Disney?
I'm sure it will be a decent enough report, but I'm no so confident I'll come away with a solid view for Disney's long-term potential. Indeed, as I've intimated in previous articles, I'm not the happiest Disney shareholder on Earth. I'm very concerned about the studio division, and I want to finally figure out exactly what Iger intends to do to bring it back to a proper, value-producing status quo. He's already bought Marvel, and he's already changed the leadership. If he thinks he doesn't need more aces up his sleeve, he couldn't be more wrong.
Disclosure: I own Disney, GE; positions can change without notice.
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