Skip to Content
Stock Analyst Update

Disney+ Still Outpacing Our Expectations; Strong Q1

Disney posted a strong start to fiscal 2021 as first-quarter revenue beat FactSet consensus. We are maintaining our wide moat and plan to modestly increase our $140 fair value estimate.


Disney (DIS) posted a strong start to fiscal 2021 as first-quarter revenue beat FactSet consensus. Disney+ now has just under 95 million subscribers, adding over 8 million in December alone. In a little over a year after launching, the service has exceeded the top end of the company’s original fiscal 2024 guidance of 60-90 million subscribers. The pandemic once again hammered the parks and theatrical businesses as revenue collapsed by 73% and 98%, respectively, versus a year ago. We are maintaining our wide moat and plan to modestly increase our $140 fair value estimate.

Revenue for the quarter dropped by 22% year over year to $16.2 billion. For the second time in two years, management has reconfigured its reporting segments. Revenue for the new parks, experiences, and products division declined 53% to $3.6 billion, due to the pandemic-related closures and capacity constraints. While we expect these hurdles to remain in place for the segment for at least the first half of calendar 2021, we are encouraged by relative demand from consumers and the continued growth in bookings. The cost reduction plans have largely worked as Florida, Shanghai, Hong Kong, and Paris all generated enough revenue to cover the variable costs of being open despite capacity constraints.

The new media and entertainment distribution division has four segments: linear networks, DTC, content sales/licensing, and other. Revenue at linear networks which includes ABC, ESPN, FX, and all other pay-TV networks, increased by 2% to $7.7 billion. Domestic affiliate fee revenue in the quarter was up 3%, which was made up of an 8-point gain from higher pricing partially offset by a 5-point decline from fewer customers. As expected, broadcast revenue grew 5% due largely to political advertising. Segment operating income margin for linear networks declined to 22.5% from 24.0% due to higher sports rights costs due to timing of the College Football Playoffs and NBA Finals.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Neil Macker does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.