Disney Drops Ahead of Earnings as Netflix Deal Disappoints

Shares of Disney (DIS) have dropped ahead of the company’s announcement of earnings results after the close.

AP

Disney is expected to announce a profit of 76 cents a share, according to FactSet, but today’s drop doesn’t mean investors are betting that Disney will miss earnings. Instead, it could be as a result of a deal it announced with Netflix (NFLX), which appears to have underwhelmed investors.

The Wall Street Journal has the details on the Disney/Netflix partnership:

Walt Disney Co. and Netflix Inc.  unveiled a deal for multiple original live-action series based on four of Marvel’s most popular characters to be shown exclusively on Netflix’s streaming-video service.

Under the agreement, Marvel will develop four serialized programs—”Daredevil,” “Jessica Jones,” “Iron Fist” and “Luke Cage”—leading to a miniseries programming event for Netflix. Netflix has committed to a minimum of four, 13-episode series and a culminating Marvel’s “The Defenders” miniseries.

Albert Fried & Co’s Richard Tullo says investors were looking for more. He writes:

We think the market expected more from the NFLX Disney announcement, we won’t comment about the deal economics yet, but we think Wall Street expected a big streaming exclusive deal on the Marvel Movies and perhaps a direct to Streaming Deal.

Again something like that could happen at the end of the rainbow but it took Dorothy a long time to know how to use her Ruby slippers and the media sector is full of witches and flying monkeys.

Shares of Disney have fallen 2% to $67.63 at 1:52 p.m., while Netflix is down 2% at $328.94.