Co-writer and songwriter Lin-Manuel Miranda (L) and an actress in costume at the world premiere of Disney’s ‘Encanto’ at El Capitan Theatre in Hollywood on Nov. 3, 2021.
Getty Images for Disney
The battle for consumer eyeballs has intensified in recent years, particularly with the onset of the Covid-19 pandemic. However, with the impact of the pandemic on daily lives receding, a new era in the streaming wars may be beginning.
Walt Disney ’s subscriber growth has been slowing in recent quarters but it managed to turn the tide in its fiscal first quarter.
Disney added 11.8 million new subscribers in the quarter, beating expectations as well as Netflix ’s 8.3 million net adds. There is an opportunity for Disney to beat its streaming rival in the current quarter too, as Netflix projected 2.5 million new subscribers, well below expectations.
Amazon ’s decision to raise the price of Prime for the first time since 2018 could also have an impact on subscriber dynamics, perhaps further opening the door for Disney.
But is this a changing of the guard? Disney CEO Bob Chapek said he doesn’t anticipate subscriber growth to necessarily be linear, but he expects stronger growth in the second half of the fiscal year, citing new market launches and fresh original content.
Looking more closely, however, Disney worked a bit of magic worthy of Aladdin’s Genie. The company’s strategic decision to include Disney+ and ESPN+ as part of a Hulu Live subscription accounted for two million of the 4.1 million new domestic subscribers.
—Callum Keown
*** Join MarketWatch editor Jeremy Olshan and economist Stephanie Kelton as they talk to leaders in business, tech, finance, and government about the next phase of money’s evolution, and meet real people whose lives are being changed as these new ideas are put to the test. Listen to the Best New Ideas in Money podcast.
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Disney’s Theme Parks, Streaming Subscribers Lift Results
Disney beat analysts’ expectations for fiscal first-quarter earnings and revenue, driven by a burst in spending at its theme parks and growth in Disney+ streaming service subscribers. Its shares, which had lost about 25% over the past year, were up more than 7% in premarket trading Thursday.
- Disney’s theme parks, which have largely reopened across the globe, generated $7.2 billion in revenue—more than double the year-ago total—with almost $2.5 billion in operating profit. Analysts had expected a 77% recovery, with $6.4 billion in revenue and $1.4 billion in operating profit.
- Chapek said theme parks had their second-best quarter ever. Disney raised ticket prices early in the quarter, and more than one-third of domestic park guests purchased services that help visitors avoid waiting in lines for rides.
- Disney’s adjusted profit per share rose 231% from the same period last year, and overall revenue rose 34%, to $21.8 billion, versus the $20.3 billion Wall Street had expected. Per-person spending at domestic parks was 40% higher than the same period in 2019.
- Disney+ added 11.7 million subscribers during the quarter for a total of 129.8 million, Hulu added 1.5 million subscribers, and ESPN+ added 4.2 million. Disney+ hits included the animated feature Encanto and the three-part documentary The Beatles: Get Back.
What’s Next: Wall Street expects Disney+ subscriber growth to accelerate in the second half of its 2022 fiscal year, because of new original content and expansion into more countries. Disney is still aiming for between 230 million and 260 million Disney+ subscribers by the end of fiscal 2024.
—Janet H. Cho and Nicholas Jasinski
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New York, Other States Join Trend to Drop Mask Mandates
New York is among the latest states to drop indoor mask-wearing rules for offices, restaurants, and other public spaces starting today. Gov. Kathy Hochul said masks are still required in healthcare settings and on public transportation, and a decision on requiring them in schools will be made in March.
- New York City Mayor Eric Adams said the city will keep its restrictions, however, including proof of Covid-19 vaccination to dine inside restaurants, attend theaters and enter other public spaces. Los Angeles is keeping its indoor mask mandate after California ends the statewide mandate on Feb. 15.
- Delaware and Rhode Island will end their indoor mask mandates Friday, and Rhode Island will stop requiring masks in K-12 schools on Mar. 4. Massachusetts will drop its K-12 schools mask mandate on Feb. 28, and New Jersey and Connecticut will let schools decide. Oregon will stop requiring masks after March.
- Centers for Disease Control and Prevention Director Dr. Rochelle Walensky said people should continue wearing masks in public indoor settings, especially where Covid-19 transmissions are high. Although “encouraged by the current trends, we are not there yet,” she said.
- Average coronavirus cases have fallen 44% from last week, to 247,300 a day, while new hospitalizations are down 25% to 13,000, and daily deaths are up 3% to 2,400 a day, the CDC said. The Omicron variant is “nearly 100%” of circulating viruses.
What’s Next: The Food and Drug Administration’s vaccine advisory committee will consider Pfizer and BioNTech ’s data on vaccines for children 6 months to age 4 on Feb. 15. If authorized by the FDA and CDC, the U.S. has enough vaccines, needles, and syringes to inoculate all 18 million in that age group.
—Janet H. Cho
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Pelosi Supports Ban on Stock Trading for Congress
House Speaker Nancy Pelosi said she would support a ban on owning and trading individual stocks by members of Congress, and that she expects Democrats to reach consensus on a proposal soon. She also wants greater financial disclosures about stock trading from federal judges, including the Supreme Court.
- Pelosi asked the House Administration Committee to sort through the current proposals. She called for stricter penalties for lawmakers who violate the Stop Trading on Congressional Knowledge Act, which requires disclosures of most stock trades and prohibits trading on nonpublic information.
- Proposals differ on whether prohibitions should apply to spouses and family members. Lawmakers’ spouses regularly buy and sell investments. Pelosi has disclosed dozens of trades her husband made in companies including Apple , Salesforce.com , and Amazon.com , The Wall Street Journal reported.
- A Capitol Trades analysis of disclosures found that at least 113 members of Congress disclosed stock transactions collectively worth an estimated $355 million that they or their family members made in 2021, buying an estimated $180 million worth of stock and selling $175 million, MarketWatch reported.
- The Federal Reserve last year imposed restrictions on senior officials after a stock-trading controversy spurred two regional bank presidents to resign. A Journal investigation found more than 100 federal judges heard lawsuits involving companies in which they owned stock.
What’s Next: Reps. Abigail Spanberger (D., Va.) and Chip Roy (R., Texas) have proposed requiring lawmakers, spouses, and dependents to put stocks, futures and derivatives into blind trusts managed by outside advisors. Sens. Elizabeth Warren (D., Mass.) and Steve Daines (R., Mont.) have proposed banning trades by lawmakers and their spouses.
—Janet H. Cho
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SEC Moves to Cut Stock Trade Settlement to 1 Day
Last year’s trading frenzy in GameStop , AMC Entertainment , and other meme stocks has led the Securities and Exchange Commission to propose speeding the settlement of stock trades to one business day from two.
- Settlement is the process of moving the money to the seller and the stock to the buyer. The SEC unanimously proposed to have the shortened time in place by March 2024. It could reduce the amount of collateral brokers have to keep at the clearinghouse.
- In January 2021, Robinhood Markets suspended buying of volatile meme stocks after it got a $3 billion margin call from National Securities Clearance Corp. Faster trade completion could help the system keep up in volatile markets and cut the time traders are exposed to counterparty default.
- The SEC also passed a proposal to make private equity and hedge funds provide investors with quarterly statements of fund performance, fees and expenses and manager compensation and undergo annual audits. It will take in public comments for two months before issuing a final rule.
- The proposal is bound to meet resistance from the $18 trillion-asset private-fund industry, including giants Blackstone and KKR . Private funds are for sophisticated investors, but often worker pension and college endowment money are invested in them.
What’s Next: The stock settlement proposal means clearing agencies, the plumbing of the stock market, will have to adapt to automation that would eliminate human holdups and pave the way for same-day settlement of stock trades.
—Liz Moyer and Bill Alpert
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Credit Suisse Posts Quarterly Loss, Warns of Tough 2022
Credit Suisse Thursday posted a wider than expected loss for the last quarter of 2021, and warned that it still faces headwinds in 2022 due to high restructuring and compensation costs.
- Credit Suisse, Switzerland’s second-largest lender, struggled with scandals and financial debacles last year, including a $5.5 billion trading loss due to the meltdown of Archegos Capital Management and fallouts from the collapse of British supply-finance firm Greensill.
- Net loss attributed to shareholders came in at CHF2 billion ($2.2 billion) in the quarter, the bank said. The loss for the whole year was CHF1.6 billion, compared with a CHF2.7 billion profit in 2020.
- Net revenue fell 12% in the fourth quarter from the same period of 2020, the bank said, explaining the fall by its “reduced risk appetite.” And net revenue only increased by 1% on a yearly basis, with revenue flat at the investment bank division.
What’s Next: Credit Suisse’s results contrast with most of its European peers, including Swiss rival UBS , which last week posted its best profit since the financial crisis and announced a share buyback program. And the stock is down 28% over the past year, compared with a 47% jump for the euro STOXX banks index.
—Pierre Briançon
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I’m thinking about quitting my job and becoming self-employed. How would that affect my taxes?
Are you about ready to join the Great Resignation and become self-employed? Yes? OK, but you need to consider the tax implications, which may not be as rosy as you think. Here’s what you need to know to make a good decision.
First and foremost, don’t buy the hype.
Becoming self-employed won’t allow you to write off all your meals as business expenses, deduct the costs of taking your friends out for drinks and to sporting events, deduct all your transportation expenses, and write off the costs of owning or renting a residence that contains your new home office. Sorry about that.
While there are some tax advantages to being self-employed, they are underwhelming and should not be a main reason for deciding to go out on your own.
Read more here.
—Bill Bischoff
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—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner
