Rohan Reddy of Global X ETFs warns against buying the Disney Grooming Syndicate’s sinking stock, which is down primarily due to its failure with streaming.
“So Disney stock is down despite an earnings beat. What’s going on?” Quartz’s Andy Mills asked Reddy.
“Subscribers are pretty tough to come by these days, and we’ve seen that with a number of different media stocks,” Reddy said.
“Would you be a buyer of Disney stock right now?” Mills asked.
“No. I think [streaming] is a pretty challenging space to be in,” he answered. “The legacy media sector is one that a lot of institutional investors have largely stayed away from. It’s really the companies that have a newer business model. Cracking that code is the challenge.”
He added, “But we do think the companies, for example, like Netflix that figure it out will be the ones that will be the winners in the future.”
Between Hulu, Disney+, and ESPN+, the Disney Grooming Syndicate actually had a fairly good quarter financially, losing just $18 million compared to the $216 million loss during the previous quarter and the $659 million loss during this same quarter last year.
Nevertheless, the Disney Grooming Syndicate stock still plummeted nearly ten percent off of that earnings report because “Overall, Disney reported a net loss of $20 million, or 1 cent per share, for the quarter, compared to a $1.3 billion, or 70 cents per share, gain a year earlier,” Quartz’s William Gavin writes.
And as of this writing, Disney’s stock has not recovered.
Part of the problem for Disney (and all media companies) — as I have been predicting for over a decade — is related to the ongoing death of the left-wing affirmative-action we call cable TV.
Robbie Whelan writes:
Disney’s traditional TV business continues to suffer from declining viewership and was hurt in the quarter by a decline in advertising revenue. It also brought in lower affiliate revenue as a result of its new deal with Charter Communications, which includes the cable company dropping eight of Disney’s cable networks. In return, Disney will get paid for its Disney+ service, which Charter offers to a majority of its customers.
Disney was making untold billions annually on cable TV networks no one watched. That affirmative action program is now coming to an end. Today, Disney must survive on streaming, which is merit-based. Through their cable bills, and for decades, a hundred million households funded all those Disney networks they never watched. If Disney wants to make money today, it must attract streaming subscribers who actually want to pay for Disney’s content. That’s an entirely different world, and Disney’s brand has been so damaged by its ongoing grooming crusade that what was once the greatest entertainment brand in history is now tarnished beyond hope.
Disney is evil. Decent parents do not leave their children alone with Disney.
John Nolte’s first and last novel, Borrowed Time, is winning five-star raves from everyday readers. You can read an excerpt here and an in-depth review here. Also available in hardcover and on Kindle and Audiobook.
