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Disney+ sees smallest subscriber growth since launch in battle with Netflix

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November 11, 2021

By Lisa Richwine and Nivedita Balu

(Reuters) -Walt Disney Co on Wednesday reported the smallest rise in Disney+ subscriptions since it launched the streaming video service to take on Netflix Inc, missing Wall Street targets and driving shares down nearly 5% after hours.

Profits from Disney’s theme park division fell well short of analyst projections, despite the quarter being the first time all parks were open since various pandemic closures. Capacity limits remain in place.

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The stumble in both the theme parks and streaming divisions https://tmsnrt.rs/3n60OoZ highlights the challenges Disney faces in the pandemic. Questions remain about how and when customers will return to public entertainment and whether that limits watching at home.

Disney is banking on new programming next year to boost streaming subscribers. Theme parks will benefit from the United States opening its borders to many vaccinated international travelers and more U.S. children getting the COVID-19 vaccine.

During the just-ended quarter, Disney+ picked up 2.1 million customers, less than half the subscribers Netflix added in roughly the same period. Analysts had projected Disney+ would add 10.2 million, according to Factset estimates.

Speaking on a conference call with analysts, Chief Executive Bob Chapek stuck by the company’s previous forecast of 230 million to 260 million Disney+ subscribers by the end of fiscal 2024.

Some investors are not convinced Disney will meet that projection, said Haris Anwar, an analyst at Investing.com.

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“The company seems to be hitting a roadblock when it comes to subscriber growth for its streaming service,” Anwar said. “Investors feel the company could miss its target of reaching 260 million subscribers by 2024, creating doubts that its service can create a serious challenge for the market leader, Netflix.”

As of early October, paying subscribers to Disney+ reached 118.1 million. Including Hulu and ESPN+, the company’s streaming customers totaled 179 million.

The company previewed a wide-ranging slate of streaming programming in development. Chapek said most of the marquee titles from the Disney, Marvel and Star Wars brands would arrive on Disney+ from July to September next year.

“This represents the beginning of the surge of new content shared last December,” he said.

Disney also sees an opportunity to bring in more subscribers with new programming for preschoolers and is investing in that area, Chapek said.

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Disney’s streaming media division, known as direct to consumer, continued to lose money as the company paid for new TV shows and movies, marketing and other costs. The unit reported an operating loss of $630 million in the quarter.

Attendance and spending rose at Disney’s U.S. parks. Disney does not expect a “substantial recovery” in international visitors to U.S. parks until the end of 2022, Chief Financial Officer Christine McCarthy said.

Overall, the media company posted diluted earnings per share of 37 cents, below analyst projections of 51 cents, according to IBES data from Refinitiv. Theme park division income reached $640 million, short of Wall Street projections of $942 million.

This week, Disney is offering the first month of Disney+ for $2, down from the usual $8, and other promotions.

On Friday, Disney will debut adventure movie “Jungle Cruise,” Marvel film “Shang-Chi and the Legend of the Ten Rings,” a new “Home Alone” movie and a batch of other programming on streaming.

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Disney also missed analysts’ estimates for quarterly revenue, which rose to $18.53 billion in the fourth quarter from $14.71 billion a year earlier.

Net income was $159 million, or 9 cents per share, compared with a loss of $710 million, or 39 cents per share, a year earlier.

(Reporting by Lisa Richwine in Los Angeles and Nivedita Balu in Bengaluru; Editing by Sriraj Kalluvila and Lisa Shumaker)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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