Disney Earnings Preview: Ad Upside and Focus on Parks

Cinderella's Castle
Cinderella's Castle

When Disney reports after the bell Wall Street will be looking for what the media giant can tell us about the strength of the American consumer.

Disney, unlike other media conglomerates, doesn't provide guidance, so analysts will be listening carefully in the earnings call for signs of a sustainable advertising recovery and for trends at the theme parks for an indication of the American consumer.

Wall Street's looking for earnings of 58 cents a share, up from 52 cents in the year-ago period. Revenue's expected to grow 9 percent over last year's quarter to $9.384 billion. Disney has consistently beat Wall Street estimates — we'll see if the company can manage another upside surprise.

Advertising revenues are expected to drive Disney's results higher, just as they've helped all the other media giants this quarter. JP Morgan's Imran Khan projects ad revenue at Disney's media networks will grow about 10 percent. That 'media networks' division, which includes ESPN and ABC, is Disney's largest and most profitable division, contributing over half of the company's expected to be higher, as they've been at all the media.

"The real wild card is Disney's theme parks, which are under the microscope as an indicator of consumer spending." -Media Money, CNBC, Julia Boorstin

The studio should manage growth over last year, thanks to Pixar's 'Toy Story 3' and Iron Man 2, from Marvel, which Disney acquired a year ago.

We'll see how much disappointments, like "Prince of Persia" and "Sorcerers Apprentice" drag on that segment's results.

The real wild card is Disney's theme parks, which are under the microscope as an indicator of consumer spending.

Disney's been phasing out deep discounts, last month raising ticket prices at the Orlando parks.


The question is, how much these higher prices affect attendance. Khan expects attendance to be down 5 percent in the quarter while Stifel Nicolaus' Drew Crum is looking for a 1 percent decline in attendance and 2 percent revenue growth from the division, thanks to those higher prices.

We can expect questions on the earnings call about how park traffic is doing into the current quarter. And we're expecting CEO Bob Iger to address the M&A activity of the past month. In July Disney sold Miramax and bought social gaming sites Playdom and Tapulous. It will be interesting to learn more about what this says about Iger's strategy?

Questions? Comments? MediaMoney@cnbc.com