Greg Portell, partner and director of global consumer industry and retail practice at Kearney, joined Yahoo Finance Live to summarize his biggest takeaways from Disney’s fourth quarter earnings.
SEANA SMITH: Disney reported its first annual loss in 40 years and suspended its dividend, but Disney + was once again the standout company with more than 73 million subscribers. And, of course, that was enough to kickstart the stock at just under 2% today.
To learn more about this, we would like to include Greg Portell. He heads a global consumer industry and retail practice at Kearney. Greg, it’s great to have you.
When we look at Disney + outperformance, I think the big question right now is whether that’s enough to boost the stock here going forward. How do you read this
GREG PORTELL: The real question is how they can survive in this saturated market. And this is where Disney has an advantage because, unlike many other media companies, they really see themselves as consumer brand companies. So they’re very used to competing for the eye and wallet share, something media companies traditionally didn’t have to worry about.
ADAM SHAPIRO: So I’m curious as someone who comes from old media – you know, he worked for ABC Partners. I asked this from a guest yesterday. I will ask you If that’s the business model for you, then what’s the use of sticking to ABC or even ESPN, you know, the cable material? Is it time to sell it?
GREG PORTELL: Well, optionality is important. When you think of Disney you realize that entertainment is their main concern, making people smile, but it’s content. So when you think about the critical strategic decisions you need to make going forward, it all depends on the option of how you get that content into the consumer’s hands or onto the consumer’s devices. The more access points you have, the more optionality you have and the better you can compete with that flexibility. How can I get consumers involved from a strategic perspective? Having the sender unit makes a lot of sense.
SEANA SMITH: Greg, your direct customer business is clearly doing well right now, but the parks are suffering. Your entertainment in terms of studios suffers. So if you take a step back and then look at the streaming and content costs Disney is currently facing, how do you see it?
GREG PORTELL: Well, I think the pressure on the parks and the studio business is to be expected in the face of COVID. I mean, it is very difficult to watch management try to face these challenges. However, what gives you hope is the fact that they have been able to manage their expenses while going through this.
So when you look at how a management team is facing a challenge like COVID or other shocks, the ability to manage costs while making the critical decisions gives you some confidence that these sectors will still exist in pretty good ones Be form.
ADAM SHAPIRO: I’m trying to be an optimist here. Once we have the vaccine and everyone in the country is vaccinated, I have to imagine that with all of the money we are currently talking about in US savings accounts, there will be a huge surge in vacation spots and Disney is just … they have to at this point be ready for some kind of tremendous growth.
GREG PORTELL: Well, most consumers are excited to go to a grocery store or restaurant now. So when they can finally start crossing state lines, you’ll be looking for them to take advantage of these high-end experiences. And the more Disney is able to sort and keep improving the on-site entertainment, the more they’ll definitely benefit from this consumer trend.
SEANA SMITH: Greg, are you a Disney buyer right now?
GREG PORTELL: Well, I think there are many positive aspects to that. So we don’t really get into the ups and downs of the movement of the stock price, but when you look at management’s ability to control the income statement and some of their ability to really get involved in the strategic decisions they make, there is a lot to be positive about.
ADAM SHAPIRO: And don’t you worry about suspending the dividend?
GREG PORTELL: I mean, that’s because of the optionality. I mean, you want to be able to give the management team the greatest possible flexibility when trying to get out of it and, given the unknown before us, it makes a lot of sense to withdraw the dividend.
SEANA SMITH: All right, Greg Portell at Kearney, thank you for taking the time to join us.