On The Rock
As the week unfolded, investors returned from their vacations, injecting renewed energy into the market. With earnings season approaching, sentiment around growth remained positive, bolstered by favorable CPI data earlier in the week. Mega-cap tech stocks continued their ascent, propelling the Nasdaq to a staggering 42% year-to-date increase.
Keep an eye out for Netflix (NFLX 0.00%↑) as it kicks off the earnings season next week, and we'll also be offering premium members with a comprehensive Big Tech MARINA update to ensure you have all the essential details this week.
The Telco/Media Sector Are Center stage
US court ruling on MSFT 0.00%↑ and ATVI 0.00%↑ deal: Attention turned to the UK's Competition and Markets Authority following a favorable ruling for Microsoft in the US court. The official date is set for Tuesday (7/18), with an extension widely anticipated. The key question is whether to expect improved terms for Activision, such as a price bump or a special dividend. Prior to this event, ATVI enjoyed unanimous favor among investors, leading to the deployment of funds from ATVI across the Communications sector, including META 0.00%↑, MTCH 0.00%↑, and TTWO 0.00%↑.
$MSFT WSJ's investigation into lead-sheathed cables: This revelation sent shockwaves through the market, causing a downturn for T 0.00%↑ (AT&T), VZ 0.00%↑(Verizon), FYBR 0.00%↑ (FiberLink), and LUMN 0.00%↑ (Lumen Technologies). Hedge funds also continue to press shorts in FiberLink.
Mission: Impossible – Dead Reckoning Part One: The latest installment in the Mission: Impossible franchise appears to be on track to gross approximately $78 million domestically in its opening week. While slightly lower than the targeted $90 million+, it still outperforms the previous entry, "Fallout," which grossed $61 million. Notably, the irony of releasing a movie centered entirely around AI amid ongoing industry strikes related to the same subject matter was not lost. It sets the stage nicely for "Barbenheimer" next weekend.
Iger's Insights: A Recap of CNBC Interview from Sun Valley
In a recent live interview on CNBC from Sun Valley, Bob Iger shared valuable insights about his perspective on the business landscape. To kick off the conversation, he humorously mentioned, "Retirement; I would highly recommend it, by the way."
Let's delve into the highlights of his talk:
Linear Challenges: Iger expressed a notable degree of negativity towards linear distribution, acknowledging that the distribution business is facing significant hurdles. He even suggested that it might not be a core focus for Disney anymore, emphasizing the importance of being open-minded and objective about its future. Regarding ESPN, he hinted at potential partnerships, particularly finding the idea intriguing. It's worth mentioning that discussions are already underway, potentially occurring this week at Sun Valley. The concept of recreating a Hulu-like platform for sports, combining forces with other sports broadcasters such as CMCSA 0.00%↑, FOX 0.00%↑, WBD 0.00%↑, and PARA 0.00%↑, has been circulating.
$DIS Direct-to-Consumer Strategy: Iger reiterated Disney's plan to acquire the minorities in Hulu, aligning with their goal of merging Disney+ and Hulu apps later this year. Recognizing that Disney is still a young player in the streaming industry with Disney+ being less than four years old compared to Netflix's fifteen-year tenure, Iger emphasized the ongoing learning process, especially regarding pricing and marketing. Notably, he shared that 40% of new Disney+ subscribers are opting for the ad-supported tier, with 40% of upfront advertising being addressable or dedicated to streaming.
Studios and Content Strategy: Iger highlighted the need for a realistic approach in the studios' domain, expressing disappointment with recent performance. He clarified that this issue is not related to personnel but rather acknowledged recent missteps, suggesting that an overproduction of content for Disney+ might have diluted the strength of the brand, particularly Marvel and Pixar. To address this, he anticipates scaling back on content spending and potentially exploring increased content licensing opportunities. Nevertheless, he maintains confidence in Disney's brand strength overall.
Parks Outlook: Iger reaffirmed a positive outlook on Disney's parks, both in terms of their structural integrity and recent trends. He refuted the accuracy of a recent WSJ article and assured investors that he harbors no long-term concerns. It's important to note that upcoming September Investor Day is likely to focus heavily on the parks segment.