Dana Walden, co-chair of Disney Entertainment, moved away from Disney's craze in New York on Tuesday, talking about the company's streaming business' growth potential and the resilience of its linear business with CNBC's James Cramer.
"This is our company's growth business," Walden said of Disney+ and the bundle of Disney+, Hulu and ESPN+. After five years and billions of dollars in investment, Wall Street turned from Disney+ to Disney+'s black ink "We're moving towards those double-digit profit margins."
Cramer praised Disney's performance in the first three months of the year, noting how much its share price has risen in the past eight deals. He praised Disney CEO Bob Iger and Walden as an effective butler for posting a lot of Los Angeles units.
"Your breadth is great. Your IP is great, but the truth is, your business is losing a quarter," Cramer said. "We all hate Disney because of this business, and now that's why we love Disney and why stocks don't exit."
Cramer pressured Walden to see if Wall Street was too negative for the prospect of traditional linear television operations in Hollywood. Walden explains how the combination of linear and streaming makes Disney appeal to a huge crowd in the best case scenario.
“We viewed the core linear channels – FX, Disney Channel, Nat Geo and ABC as an opportunity to program for audiences who are still watching online, and then stream the same content window to the streaming media, which is always needed and available to subscribers when needed,” Walden said. “This allows us to talk to a very wide audience. We have 50% of our audiences watching online programming while 50% of our audiences watch streaming media. So we have a good understanding of both forms of distribution.”
Walden also talked about the morning news - Pricing and Launch Programs ESPN's launch plan will be purchased in the fall as a streaming channel, or as part of an existing Disney+ bundle that currently includes Disney+, Hulu and ESPN+. By the fall, ESPN+ tiles will be replaced by parent ESPN, which will incorporate the original content produced for ESPN+ since its launch in 2018.
“Lookingly, you’ll be able to bundle these three services together,” Walden said. “A very simple interface, all of which will go through an app, Disney+. Our bundling strategy does pay off.”
Walden also pointed out how Disney's Powerhouse Film Studio fed the Marquee champion to Disney+.
"These movies are great. Many of them are performers at the box office of over a billion dollars. Then they go on to Disney+, where they stimulated the acquisition of subscribers and promoted engagement."
Cramer can't stop praising Walden. He said excitedly, "It also brings your attitude. People want to work with you. Celebrities want to work with you."
Meanwhile, Cramer puts pressure on Walden why valuations between Disney and Netflix are still so different. Netflix shares closed at $1,138.44 on Tuesday, up 2.6% on the day. Disney rose 1% on the day to close at $111.38.
Walden is seen as the top internal contender to replace Iger's CEO next year. Sitting down Tuesday with CNBC’s infamous unpredictable owner will only enhance that identity. In response to Cramer, Walden cleverly avoided the Netflix vs. Disney issue to strengthen the company's belief in the Disney+ bundle and become its future engine.
"It's worth remembering that Disney+ is now five years old. It's still a very young service and we're very happy with where we are heading. We're growing in all the important metrics," Walden said. "We're heading in the right direction and we're really not studying competitions. We have a unique ecosystem. Disney+ is the gateway to Disney enthusiasts around the world, and these iconic stories and characters are activated in our parks, our cruise ships, consumer products. In consumer products, we have a lot of ways to optimize and earn other companies to make it impossible for other companies to do it."