Investing Club: Here are the 4 things Disney CEO Bob Chapek said that give us confidence

Published Wed, Feb 9 20226:07 PM ESTUpdated Wed, Feb 9 20228:22 PM EST

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

Disney CEO Bob Chapek offered strong commentary Wednesday on CNBC's "Closing Bell" after a top-and-bottom line earnings beat , adding to the Club's confidence in the media and entertainment powerhouse. Dow stock Disney popped 7% in after-hours trading, as Wall Street cheered the numbers, which included fiscal first-quarter EPS of $1.06 that blew away expectations. Revenue of $21.82 billion also beat estimates. ( Read our bottom line on Disney's earnings report.) Chapek spoke to CNBC's Julia Boorstin before Disney's earnings call. Here were the four comments from the CEO that stood out the most to Club. 1. Content is king Disney+ subscribers surpassed projections, coming in at 129.8 million total compared with the 125.75 million expected, according to StreetAccount. Chapek told CNBC the reason Disney keeps adding subscribers is the company's vast content library, and he touted heavy investments to bring more to the platform. "We'll have more ... content on our big franchises added this fiscal year, double what we had in '21, so that new content really is what drives it," Chapek said, noting Disney's push to add more content is a global endeavor. "Last quarter, we said we're going to be increasing our investment in our international local content. We're now producing 340 new productions there." The Club found these remarks particularly encouraging because it speaks to Disney's ability to meet its long-term subscriber goals for Disney+ if attractive content truly is primarily what's getting people to sign up. The company has previously said it will have 230 million to 260 million Disney+ subscribers by the end of fiscal 2024, and Chapek affirmed that guidance Wednesday. 2. Reopening play While Wall Street puts a lot of attention on Disney+, CNBC's Jim Cramer has long argued the company has way more going for it than just video streaming. He and the Club have believed that Disney's theme parks business will recover from the Covid pandemic slowdown. Chapek painted a picture of remarkable demand in that area, emphasizing that quarterly revenue doubled to a better-than-expected $7.2 billion at the parks, experiences and consumer products division compared to a year ago. In particular, the Club liked what Chapek had to say about guests upgrading to the company's premium Genie+ offering, which unlocks premium benefits inside the theme park. "By and large, to a very surprising extent, about a third to 50% of our consumer base, our guests in the park, are choosing to upgrade to Genie+ which is way above what we expected." 3. Sports betting Chapek noted that as more states around the U.S. legalize sports betting, it creates potential for ESPN to drive engagement. The Club liked gaining insight into how management is thinking about this trend to bolster ESPN and streaming service ESPN+. "The future of sports, it's not just about the linear rights. It's really about the direct to consumer options that we give consumers that they're voting more and more for with their pocketbooks," Chapek said. "At the same time, you've got the sports betting option, which really adds something material, we believe, to that proposition as the new younger audience wants to be a little bit more engaged in the outcome of the game," Chapek said. Disney wants to make the sports viewing "less of a sit back and more of a lean forward" experience, Chapek said. Put it all together, and the company believes it will once again make ESPN "a big growth business for us," the CEO said. Earlier in the day, before Disney's earnings, Cramer said on the Club's Morning Meeting : "We would love to hear something positive with ESPN." He certainly got it. 4. Metaverse opportunity Chapek discussed the metaverse, and the Club agrees with Chapek's outlook on how Disney can capitalize on the development of these interactive, immersive virtual worlds. "It's going to take all the great things that we as a media company have with Disney+ and use that as a platform for the metaverse. But at the same time, we have something that no one else has and that's the physical world. The world of our parks," Chapek said. "If the metaverse is the blending of the physical and the digital in one environment, who can do it better than Disney?" (Jim Cramer's Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. 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Bob Chapek, Disney

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