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Analyst Weighs In On Disney's Q2 And The 'False Rally' In Media Stocks


Walt Disney Co (NYSE: DIS)'s earnings report showed that its TV business is facing various headwinds, including higher content cost and subscribers ditching their cable offering.

Speaking as a guest on CNBC, Bernstein's Todd Juenger described Disney's report as confirmation of "what anybody who has been paying attention should have already known."

Juenger explained that Disney's biggest TV station, ESPN, is at its core an extremely powerful brand for the many people that care about sports. But at the end of the day, not everybody cares about sports and there are tens of millions of households that are still paying for ESPN but don't even want it in the first place.

False Rally In Media Stocks

Meanwhile, Disney, along with other TV stations, are guilty of introducing to the public skinny-bundle and over-the-top offering packages that are intended to be lower priced and offer consumers greater freedom and flexibility to pick and choose what they want.

But what has been launched by media companies "all look the same" with identical offerings including exposure to the big networks and big sports names. As such, these platforms are failing at bringing in incremental paying customers into the system.

With that said, Juenger thinks media companies have experienced a "false rally" as of late.

"Media stocks have underperformed the market, all of them, for the past two calendar years," Juenger explained. "Post the election, they started going up and outperforming the market on things like expected tax reform but nothing fundamental."

Bottom line, the analyst believes Disney's report shows its fundamentals are in reality getting much worse.

See Also:

Disney's Q2 More Of The Same: Strength In Parks Offset By Media Concerns

In Age Of Digital Platforms, Disney's Direct-To-Consumer Strategy Represents Major Opportunity

Posted-In: cable CNBC Cord Cutting disney Disney Earnings ESPNAnalyst Color Media


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