Disney unexpectedly posted an adjusted profit per share where a loss had been expected, after the coronavirus pandemic hit the company in its most lucrative theme parks, media networks and studio film businesses. Myles Udland, Seana Smith, Dan Roberts, and Jared Blikre discuss on Final Round.

Video Transcript

SEANA SMITH: I want to get to some breaking news that we have here after hours. Disney is out with earnings results, shares trading off just around 3% after hours. Jared has the numbers for us. Jared.

JARED BLIKRE: That's right. It was a miss on the top line revenue coming in a little bit weaker than expected. That number is $11.78 billion. The estimate was for higher at $12.39 billion. But they actually made a profit in adjusted EPS of $0.08 per share. The estimate was for a loss per share of $0.63, so that is an improvement.

And then just looking at some of the different segments here, their parks, experiences, consumer products revenue down 85% year-over-year, kind of within expectations, so that was only $1 billion. The estimate was for $1.03 billion. We'll call that in line.

Third quarter media networks revenue $6.6 billion. The estimate was for lower at $6.38 billion, so that is a beat. That number only down 1.7% year-over-year. And then media networks operating income came in at $3.2 billion. And that's down 50%, but pretty well beating expectations of $2.35 billion.

And then on the Disney Plus subscriber front, that came in a little bit lower than I expected, and that's probably driving some of the negative sentiment here along with that revenue miss. So Disney Plus subscribers coming in at 57.5 million. Estimate was for 59.4 million.

And just looking at some of their other segments, looking at studio entertainment, that's $668 million in operating income, down 16% year-over-year. But it did very well beat expectations, so $668 million versus expectations of $294 million. Cable networks revenue $4 billion. The estimate was for-- excuse me-- $4.16 billion. And broadcasting revenue coming in at $2 and 1/2 billion versus estimates of $2.16 billion.

But just to go over the headline numbers again, revenue was a miss, but they did manage an $0.08 per share profit versus what they did last year was 1.35-- $1.35 year-over-year. Estimated loss, though, was for $0.63 per share. And the options implied volatility is something like 5%, so that's what the stock market or the options market is saying they're expecting the stock to move tomorrow, so far only down about 3%. And also note that in their last nine of 12 earnings announcements, the stock fell close to close-- measured the day after-- and eight of the 12 past quarters, they did manage to beat on EPS. Seana.

SEANA SMITH: Yeah, Jared, these are pretty interesting numbers that we're getting from Disney. And I want to bring in Dan Roberts here. And Dan, just to start it off with the Disney Plus number, because I know we were talking about that last hour, and that was an area of the company that has really shown a lot of success over the last several months, benefited from the COVID-19 lockdown that we've seen. But it was a miss here, just in terms of straight numbers, 57.5 million subscribers. The estimate on the Street was for just over 59 million.

DAN ROBERTS: Yeah, that's right. Growing subscribers, but growth slowing here, because when the platform first launched the growth was skyrocketing. Now of course, these are still big numbers for how long this service has existed. Let's keep in mind that it launched in November. But as we know, it's all about expectations, and the Street was looking for 59 million and change.

So the new big-- big picture number 57.5 million, still a pretty big number. Hard to get to that number in that amount of time for the other new streaming apps. Can be very interesting to check in on Peacock and HBO Max after those apps have been around for, what, eight months or so, the amount we've seen Disney Plus out in the market.

Now, I'll also say the biggest picture here, as Jared alluded to, the profit-- I mean, the big headline was that Disney was expected by the Street to have a loss for the quarter, and it didn't. It had a profit. Pretty surprising. Now, you know, you try to piece through, how did it actually do that because look at that down 85% number for the parks, which no surprise, but my goodness, to see it so starkly put there. 85% down compared to a year earlier.

And keep in mind the parks are the profit engine of the company. Part of the reason, I would think if you look through the numbers here that it avoided a loss, media network revenue not down as much as you'd think. Pretty-- pretty surprising.

And I think that that speaks to ad sales sticking with it, you know, brands and companies not necessarily leaving in the droves you'd expect. I mean, keep in mind here, a lot, a lot, a lot of typically big spending advertisers pulled their ad dollars when there weren't live sports. But clearly not as many as you'd thought, not as many to create the disaster that was expected. So you know, a surprise profit here instead of the loss that was expected is a big beat in that regard.

SEANA SMITH: Yeah, Dan, it's going to be really interesting just to hear what they have to say about their plans for the theme parks here in this conference call. Obviously, Bob Chapek, I mean, that has been the thing that he has been focused on here, well, going back to his job before becoming CEO, but also just in terms of the last couple of months and the tough decisions. And we've heard that Bob Iger has been [INAUDIBLE] more focus on the Disney Plus subscriptions, that part of the business.

And Bob Chapek has been focusing on the theme parks. When we talk about the fact that there's so much uncertainty here with this company just in terms of their plans for opening up the parks, how many people will be able to go-- I mean, Disneyland out in California is still not open. So the fact that we don't even have a date for that to be open, that's a huge headwind that's facing Disney here in the current quarter and then also in the final quarter of 2020.

DAN ROBERTS: Yeah, the parks issue is not going away. I mean, let's be clear here. Obviously, a pandemic not at all over. But B, they're going to still see a big hit for a while now as long as they're at reduced capacity. And as you mentioned, Disneyland not open yet. Disney World opened, despite criticism, but with severely reduced capacity.

Now that said, good to have some revenue at the parks rather than no revenue, right? I mean, Disney World has at least reopened. Some of the global parks have reopened. But it's going to be a problem for a while. Now that said, you were talking about it's going to be interesting to hear what they say about how to reopen the parks.

I'm also very interested to hear how soon they ramp up or, I guess, maybe return to normal the investing in shooting new projects. There were a number of things that were pulled from-- from Disney Plus, or I guess delayed, because they were almost done, not quite done. "Marvel" original shows.

And then, of course, there were things that Disney hyped when it announced the launch of Disney Plus that were tabled and haven't started shooting because of the pandemic. Now of course, one big, big win is that apparently "Mandalorian" season 2 had already been shot, so people are pleased about that. Of course, that had a couple of Emmy nominations.

But I want to hear about spending. And then, you know, how about the media divisions when it comes to ESPN? I mean, what does that network going to do in terms of, you know, putting people in certain places, how much do they spend, what happens with college football, what happens with the NFL? I mean, they've got the NBA and you can bet your stars that Disney and ESPN are very, very pleased to have the NBA back because, of course, you remember how much ESPN was criticized for spending so much to get that NBA package a couple of years ago.

But just like the parks, there's still going to be an overhang for a long time. So are live sports, and they're losing out on advertising revenue there. If there's no college football, that's going to be a big problem for ESPN, and thus a problem for Disney's media networks division.

SEANA SMITH: Yeah, it certainly will be. But again, Dan, like you started off your [INAUDIBLE] saying, I think the big headline here is the profit that Disney posted in this current quarter, a profit of $0.08 a share. We were expecting a loss here. So much better than what the Street was expecting to see going into this report.