Disney Soars To Record Highs As Wall Street Wowed By Price Hike, Subscriber Growth Forecasts

€On an otherwise abysmal day for the Dow, Disney shares are the lone standout as the “streaming service with a theme park/content studio attached” is showing Wall Street that its decision to go toe-to-toe with Netflix is panning out even more quickly than the company had initially warned.

Despite initial warnings that – thanks to the resource-intensive process of launching its “Disney+” streaming service – it would take as long as 5 years before the business becomes profitable, the world’s largest entertainment company saw its shares hit an all-time high on Friday as Disney’s big bet on streaming was officially declared a “winner”.

To be sure, the business remains a cash inferno. Like Netflix, Disney – which held its investor day on Friday – is committing to burn absurd amounts of cash on a slate of programming that has awed both viewers and Wall Street analysts alike. According to Bloomberg, Disney announced an ambitious development slate with a budget of between $14BN and $16BN to finance dozens of new shows and movies over the next four years.

The company’s internal projections, which have apparently been taken at face value by Wall Street, project that “Disney+” could draw as many as 350MM subscribers by 2024, thanks to popular programming from Marvel, Star Wars and Pixar.

Additionally, Disney is moving forward with a price-hike telegraphed earlier this year. In the US, the service will rise by $1/month to $8/month, while a 29% price hike in Europe will bring the cost to $11 (€9).

Disney’s shares rallied more than 11% on Friday, adding more than 125 points to the Dow.

Importantly, Disney also announced a handful of big wins on the live sports front, seen as critical new territory for the clutch of streaming services competing for eyeballs.

Executives at the presentation also announced that ESPN and ABC will become the home for the Southeastern Conference’s top football and basketball games under a 10-year deal starting in 2024, featuring teams like Alabama and Auburn. The company will pay in the low $300 million range each year on top of previous commitments, or more than six times what CBS currently pays, Sports Business Daily reports, citing unidentified people.

“We’re definitely still in launch mode as it relates to Disney+ – we’re still going into new markets,” Chief Financial Officer Christine McCarthy said. “And this is where we are at this point in time. This is a minimum amount of content that you will be seeing.”

Many analysts suspect that streaming will eventually turn into a zero-sum game, with only a handful of competitors becoming “must haves” (a status accorded to nobody but Netflix, and maybe HBO) while the rest languish. Right now, Disney+ probably has the best claim to join that top tier.

Another incidental benefit of relying on a streaming service for growth: You can also boost profits by slashing jobs at your legacy businesses, as Disney is also doing, since people aren’t going to be visiting movie theaters or theme parks much when we’re all living in our private hygienic bubbles. As far as theater owners are concerned, Disney isn’t sticking the knife all the way in – at least not yet. Unlike Warner Bros, Disney, the most dominant player at the American Box Office, Disney will still release some of its biggest-name theatrical films in theaters.