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tv   Whatd You Miss  Bloomberg  August 12, 2021 4:30pm-5:00pm EDT

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caroline: i'm caroline hyde. romaine: i'm romaine bostick. disney is the biggest entertainment company in the world and right here on the biggest show in the world, we will talk about shares higher in after-hours trading. a lot of this has to do with the return of that parks business. the company is a perfect example of the push and pull of the optimism as everyone talks about the delta variant and the
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realities of how to deal with that. this reality is ramping back the demand for travel. san francisco is the latest city to require proof of vaccination to go out to restaurants, bars and other things. consumer sentiment is still there. consumer sentiment about spending and travel is wrapped up in the performance of disney. parks, streaming services. we will dive into what is going on with this company. let's get down to it and talk about some of the numbers. ed ludlow is in california. what have we learned? ed: on the top and bottom line, they are adding 12 million or -- or so net subscribers, above expectations. hulu and espn plus also got in on the act. they have now millions of subscribers between them. it not netflix levels but pretty good. that helped boost the top line. it also meant a narrower loss
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for the direct consumer division , which houses streaming. streamers -- also looking at parks. the parks have issued experiences and products, and since the march quarter of 2020 when the pandemic was so rampant, 300 56 million dollars of operating income when they were looking for $41.2 million. it wasn't a perfect set of numbers. linear tv lower than expected profit because of the return of live sports bringing with it additional costs relating to covid and that weighed on the bottom line. advertising costs and sales for pay-per-view tv helped boost the top line. this isn't a perfect set of results. there is disruption from covid and they warned that will impact film and television as well as live events. they say fiscal 21 costs will reach $1 billion. but compared to expectations,
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this is a magical set of numbers for the med -- most magical show on television, what did you. -- what you miss. caroline: ed ludlow, we thank you very much. he is nothing if not funny. after a year and a half away, disney was hoping "black widow" would jumpstart a resurgence in theaters. but it is slowly losing magic. joining us now is lucas. we want to delve into the scarlett johansson case but tell us about black widow and the way they put the movie back into theaters and whether it was good at all. >> it is really hard to judge good or bad in a pandemic, when there is no normal comparisons for it, but they released it on streaming and in theaters at the same time, the thinking being
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those people who wanted to see it in theaters would and those who got uncomfortable going to theaters could watch it at home. the first weekend struck people as a big success between domestic box office, international, streaming numbers, the movie grossed over $200 million. the numbers fell off after that, which led to a lot of discussion and analysis as to whether this was a flawed strategy, whether releasing it online, which prompted a lawsuit from scarlett johansson -- it is hard to know. most movies released in theaters during the pandemic have fallen off a lot after the first weekend, not just those that were available on streaming. seems like you have a subset of the population that is eager to go back to theaters and see these big blockbusters. but a lot of the population is reticent. taylor: rich green felt mentioned -- rich mentioned two films that disney said they
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wanted an exclusive theatrical release. he said why not do it with streaming as well? they wanted to be flexible and listen to consumers. why is this the right approach? >> if you are disney or any of these movie studios, and you have a big movie title, something that you spent $100 million, $200 million to produce, the best economic outcome is still to release it in theaters because you can make a lot of money. a significant profit, with an exclusive release. these studios have done deals where the window between streaming and theaters is shorter, so you get the benefit of the release and can use it to drive subscribers to the streaming service. what we have seen with movies and big titles on streaming is a desire to drive subscriptions. disney plus isn't having problems adding new subscribers. if they can take a big pixar or
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animated or marvel movie, release it in theaters, get traditional money and still put it on streaming to entertain fans at home, that is the best economic outcome. studios view that as the long-term plan. they like certain movies in theaters because it is economically beneficial. romaine: we are still not really seeing theaters get packed. people who want to go and take that risk in this environment are willing to do it. maybe a couple years from now past the pandemic, that changes. are there geographical differences? before the pandemic, we know theatrical releases were getting a lot of money from the overseas markets, markets outside of north america. is there a difference in how the consumption is being done? >> it has changed a lot over the last few months. there was a period where for example, the box office in much of asia was strong. chinese movie theaters opened up months before they did in the u.s., same with korea and japan. you had movies they're setting
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box office records. that is not as much the case now in part because of lockdowns and covid spread in those countries. in china, you have had a lot of u.s. movies not being able to get distribution dates in china. i think there was a two month period where there were no u.s. movies opening there. europe hasn't opened up as quickly as the u.s. in a lot of cases and i think most of the non-asian world remember -- resembles the u.s. and there is no real predict ability, which is why you have a studio like warner bros. that released movies on hbo max at the same time. caroline: thank you, lucas shaw. we will talk about the press release. coming up, from the movies to the magic kingdom. we speak about the challenges that still lie ahead, up next. this is bloomberg.
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mark: the pentagon says it will send about 3000 more american troops to afghanistan temporarily to help sick care the drawdown of u.s. embassy personnel at the embassy in kabul. a spokesman said the first deployment would occur in the let -- in the next 24-48 hours. this as taliban forces advance on more provincial capitals. the taliban holds an estimated two thirds of afghanistan. president biden says prescription drug prices are, quote, outrageously expensive in america. the president said one in four americans struggles to afford their medications.
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>> right now, right here in america we pay the highest prescription drug costs of any developed nation in the world. of any developed nation in the world. about two to three times what other countries pay. mark: the president says his plan to lower drug prices includes negotiating with companies based on a fair price that reflects the costs of drug development and profits, but is still fair to consumers. booster shots that are expected to be approved for people with compromised immune systems aren't appropriate for other people at this time. that guidance, today for the -- from the cdc. the fda is expected to recommend a third covid-19 vaccine dose for immunocompromised people, but the cdc director says no one else should try to get another shot on their own. officials say booster shots are likely to be recommended for the
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elderly at some point. new york governor andrew cuomo's resignation isn't putting an end to questions about his administration's handling of covid outbreaks in nursing homes. the state attorney general found the administration understated the death toll in nursing homes by thousands and fidelity's may have been fueled by a state order that forced the facilities to accept recovering covid patients. families of more than 15,000 new yorkers who died in nursing homes are urging state lawmakers and the justice department to keep investigating cuomo after he leaves office. globally -- global news 24 hours per day, on-air and on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. caroline: welcome --
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romaine: welcome back. we are focused on disney. the whole ecosystem, it puts out movies, sells products for those movies, theme parks, you can stay in a hotel based on those movies. before the pandemic, the parks business was the biggest source of revenue. that dropped off last year but it seems to be coming back. caroline: breaking news, they are seeing strong bookings. the cruise ships in particular. they say overall, the experience seems to be coming back with people going back to the parks. they have a great statistic, bloomberg reporting, walt disney world resort, shanghai over the entire quarter, hong kong 72 days, disneyland 65 days, currently 19 days in the third quarter. taylor: the parks experience, $3.43 billion, out -- and in
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operating income of performing estimates. john, when you take a look at those numbers, are you impressed or thinking this is a road to recovery? >> i am impressed. i think there was some concern based on the latest delta variant situation. within the industry, we received some encouraging signs from competitors like universal theme parks and the seaworld parks, that they were performing better than expected. in many ways, we would expect disney as a leader of the themepark group, to perform better than expected. romaine: seems to be performing better than expected. we are showing images on the screen of people cleaning and people in masks. with regards to the steps disney is taking to make sure things are clean and people can feel safe, has there been any additional cost, that are
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material enough for investors to be concerned about? >> i think the key thing to keep in mind is how critically important it is for disney to maintain its trust with visitors. disney has a great brand in our industry. people feel disney is a trusting company. when you go there, they will be doing everything they can reasonably do to keep you safe in this situation. already, they have done some recent steps like bringing back the indoor masking requirement. they put many more plexiglas barriers inside of lines and other areas. you can see signs they are doing everything they can. this is important because now, we are in a situation where especially in florida, there is an increase in cases. there will be concern, but many of these tourists, and we are a few weeks before the end of
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the traditional summer season, they have been locked in. these visitors are likely going to come as long as they are assured disney is doing everything it reasonably can to be safe to visit. caroline: and a safe place to work. what is affecting so many businesses, the labor shortage and the ability to get people working for you at a given wage. there have been viral videos reportedly showing disney world and the like perhaps feeling the strain of that, not able to clean up at the pace they would wish to. how much of that is something disney needs to understand and ensure they are tackling at great taste? -- great haste? >> disney as a leader in customer service within the themepark industry. for businesses in general, as well. as a result, people expect disney to maintain that high-level of customer service,
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including cleanliness and all that customer service entails. of course, we understand there are labor shortages and that will have some impact. but as long as disney is doing every thing it can to maintain its expected service levels, they should be able to work through this current labor shortage situation. taylor: you also speak to some of the intangibles, the properties and values that don't necessarily show up on a quarterly cash flow basis but you talk about the realistic portfolio with rising real estate prices across the country. how could they also benefit from the brand, but also owning some of these properties? john: i think it is so important, when you are looking at the different divisions of disney, to keep in mind they have different business models. the movies and the tv shows, the entertainment side, much more short-term results, much more
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quarterly focused type of businesses. the theme parks, the resorts, the real estate operations, the cruise lines, those are long-term operations. so of course, revenues, profits are important as far as how they can provide value to the company. they can also help the company financially by increasing its asset value. if we are seeing real estate values overall increasing, we have to remember, disney owns tens of thousands of prime real estate acres, much of which has already been developed. much of it has not. that, in the long term, is an important aspect of its operation. it is as exciting as the movie and tv side of the business. the themepark and resort side and real estate development side of the business, traditionally over the decades, has provided
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that long-term stability and financial supportive foundation that has helped the company in the long-term and made it a really good long-term investment. romaine: we appreciate you taking time to be here. john gerner with a wealth of experience in this industry dealing with not only live events and being part of the films, and managing partner at leisure business advisors. we will talk about disney and we will talk about the new "star wars" experience. it is an expensive experience, and it is for a reason. our next guest talks about the future of the business model, going after the high end consumer. this is bloomberg. ♪
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caroline: we are focused on all things disney. the coronavirus may be delaying some vacations, but the company has given "star wars" fans something to look forward to with a hefty price tag. this story got us chuckling but people are going to spend this. taylor: it is a two day experience called the "star wars " space voyage. you can go for about $5,000. romaine: cheaper than virgin galactic. taylor: $6,000 per voyage, per night i believe. my favorite thing, lightsaber training. you face off against a remote training device. romaine: my gosh. taylor: it is part of your hotel stay. caroline: what food is that? romaine: congratulations. they know how to make a buck. our next guest wrote about this.
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his bloomberg opinion column, he talks about economic trends and what is going on. you point out so simply in the column yesterday about how -- so simply in the column yesterday about how companies are going after a growing wealth in this country right now. >> over the past 30 years, the average net worth of the american household has increased to just over $1 million. this inequality is at the upper end but that is the point when it comes to this. there are lots of wealthy households with money to spend and disney thinks they can tap into that. caroline: an interesting sign of optimism, where people have pent up money. they haven't been able to spend as much as they would like and they are seeing travel will be first and foremost. >> you look at something like coachella, which they increased
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their price over the years. the average ticket is around $1000. we have seen signs there is a market for this. we haven't seen a big flashy experience where it is like, this is only what we have and it is $3500 for two days. taylor: are they pressing people out of the market? does this come across as obscene for that price? >> i'm sure it will be an issue for a while like anything, but assuming it is cool, and because it is disney i'm assuming it will cool. taylor: it is lightning -- lightsaber training. of course it is cool. >> instagram influence or, i think it will be a hit. romaine: you draw some parallels in your column about what we saw in vegas, which went down the line and what we saw also with some of the sports stadiums. you talked about comiskey park, which has become u.s. cellular -- >> guaranteed rate. exactly.
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in the early 1990's, we had a similar upscale boom where las vegas built casinos, pro sports stadiums became more luxury focused and started selling personal seat licenses. movie theaters started getting more expensive. coming out of the 2008 crisis it wasn't cool to spend money for a while but i think we have passed that. caroline: star wars galactic star cruiser. it is the new mgm grand, the new treasure island. conor sen. you have to read his stuff. draws attention to phenomenal things. romaine: this doesn't actually go to space? caroline: correct. one uses one's imagination. they would have given it to virgin galactic. romaine: wouldn't that make a good mash-up, disney and "star wars" with blue origin?
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caroline: that price tag will be a lot. tomorrow, we will be digging into students in the u.s. returning to the classroom. that does it for "what'd you miss" ♪
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