Disney goes all in on streaming with big NFL and WWE deals: Opening Bid top takeaway
Advanced Micro Devices (AMD), Snap (SNAP), and Super Micro Computer (SMCI) are getting hit on Wednesday after less-than-blowout earnings reports — and blowout is what this FOMO market wanted!
If there's any saving grace here, it's that each of these tech stocks is getting dumped for company-specific reasons rather than a fundamental change in the bullish AI thesis.
AMD let investors down on the timeline of getting AI chips back into China due to further regulatory scrutiny.
Snap had an ad sales glitch in the quarter that led to its latest earnings day fumble.
And Super Micro missed estimates and is getting penalized for providing guidance that is overly upbeat in light of this quarter's execution.
Despite the heavy tech focus, investor attention is also getting pulled in the way of Disney (DIS).
The entertainment giant beat estimates and lifted guidance.
Even still, the stock is being sold off as the company's guidance hike wasn't as joyful as a photo op with Mickey Mouse.
Zoom-in: Disney's flurry of deals
Disney reported a strong showing in its parks business. And the direct-to-consumer division led by Disney+ turned a solid operating profit of $359 million, compared to no profit the year earlier.
But a flurry of headline-making deals has stolen the thunder.
Disney has inked a deal with the NFL to acquire the NFL Network and other media assets in exchange for the NFL taking a 10% equity stake in ESPN. It also reached a $1.6 billion agreement with TKO Group's (TKO) WWE for exclusive rights to high-profile events like Wrestlemania.
The deal is for five years and begins in 2026.
"We feel terrific about the assets that we'll be getting for the deal — the combination of the NFL network and all of what that brings, [and] in addition to that, combining our fantasy football business with the NFL's fantasy football business, plus the ability to market RedZone overall," Disney CFO Hugh Johnston told Yahoo Finance (see video above).
"We think about it from two perspectives," Johnston added. "No. 1 is the impact it's going to have on the ESPN direct-to-consumer business, which we think will be super positive. And then second, obviously putting the NFL network together with ESPN will create both revenue and cost synergies. The outcome of that from an investor perspective is it'll be accretive by about a nickel before purchase accounting."
Johnston declined to disclose the value of the deal. Though ESPN has been valued in a range of $25 billion to $30 billion, so one could do the math on the value of the NFL's stake.
The wins
Big deals put ESPN in a very strong position ahead of its $30 a month streaming service launch later this year.
Cautious consumers are still showing up to the parks.
Disney is finally seeing direct-to-consumer operating profits.
The losses
Full-year guidance was not raised as much as some likely hoped.
There was no outward signal on CEO Bob Iger's successor.
The linear TV network business remains in structural decline.
Bottom line: Iger is clearly going all in on a streaming future with these deals and also solidifying his legacy as he nears handing off the baton to a successor. Given the importance of content to Disney's financials, it's hard to argue these are bad deals even when considering the hefty price tags.Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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