'Race Against Time': Experts React To Disney's Q3

Walt Disney Co DIS shares had lost more than 6% by Wednesday afternoon after the media and entertainment giant released a worse-than-expected third-quarter earnings report Tuesday.

Morgan Stanley's Q3 Takeaways

Disney's third-quarter showed a segment operating income miss of $3.96 billion versus expectations of $4.67 billion due to poor performance across all business segments, Morgan Stanley's Benjamin Swinburne said in a note. By segment:

• Media networks showed 20% affiliate growth, which was 200 basis points below expectations.
• The parks business was impacted by lower U.S. attendance and elevated expenses.
• The studio business recorded a $70-million operating loss from Fox assets.
• The direct-to-consumer business suffered lower-than-expected revenue.

While Fox's contribution fell short of expectations, it is important to note the assets are going through an earnings transition, the analyst said.

Disney is prioritizing longer-term earnings growth from streaming value for near-term earnings woes, Swinburne said.

Fox's film studio remains a turnaround story. and the 18-month closing process likely "steepened that road to recovery," he said. 

"We remain confident in the longterm opportunity to improve operating performance and leverage its IP to drive Disney's DTC strategy." 

Morgan Stanley maintained an Overweight rating on Disney with an unchanged $160 price target.

Related Links: AT&T, Disney And More 'Fast Money' Picks For August 7

Tigress Partners: Buy The Dip

Disney's earnings report marks the first ever full quarter of operation with Fox's assets under its umbrella, Tigress Financial Partners' Ivan Feinseth said in his daily newsletter.

The "complex" report came in short of expectations, but the longer-term story is solidified by a record-breaking $8 billion in box office revenue during the first seven months of 2019, he said. 

"The strength of Disney's box office shows that it is the undisputed king of content, which will drive subscribers for its upcoming DTC streaming service Disney+," Feinseth said.

"I believe significant upside exists and would view any pullback as a major buying opportunity."

Swisher: Disney's Tough History Online

Recode executive editor and co-founder Kara Swisher told CNBC that when she speaks with Hollywood insiders, the main message is consistent that Disney "is it."

The company continues to dominate in content and is led by a strong CEO in Bob Iger, she said. 

Yet Disney is very late to enter the streaming video space and has an unfortunate reputation of "screwing up on the internet," Swisher said. 

The pressure is now on Disney to succeed in its streaming business, or else the audience will simply sign up with rival platforms, she said. 

CIO: Race Against Time

Disney continues to ramp its streaming business at a time when cord-cutting trends are accelerating, Jack Ablin, Cresset Capital's chief investment officer and founding partner, told CNBC.

This puts Disney in a "race against time," although all signs point to a launch in November, as previously expected, he said. 

Disney may also feel the pressure to make up some of the losses it is seeing in cable with the streaming business, Ablin said. 

"It wasn't long ago where investors had pretty much written off ESPN as dead in the water," he said. "So perhaps this new avenue will breathe new life into that property."

Related Link: Bob Iger Talks Disney's 'Transitional' Q3 With CNBC, Highlights Streaming Business