Closing Bell - Closing Bell Overtime: Disney CEO Bob Iger Exclusive 11/8/23

Episode Date: November 8, 2023

Disney posted strong numbers for its Q4 and full-year. CEO Bob Iger sits down with Julia Boorstin for an exclusive interview on Disney+, ESPN, the strike and more. Plus, reaction from former ESPN CEO Steve Bornstein. Shift4 CEO Jared Isaacman on the latest quarter and fintech trends. 

Well, the S&P and Nasdaq eking out gains. This is an extension of the longest win streak we've seen for both of those averages since November of 2021. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Fort is off today. We are just minutes away from Disney earnings as investors look for updates on streaming, sports, and that activist campaign from Nelson Peltz. We'll talk to Disney CEO Bob Iger exclusively as soon as the number hits. So that is just a few moments away. We're also going to get numbers this hour from Affirm, Arm, Instacart, Lyft and many, many more. But as we wait for those earnings, let's get to the market action. Joining us now is Charles Schwab, chief investment strategist,

Lizanne Saunders. Lizanne, it's great to have you on today, given the fact that, yes, OK, the S&P eked out a gain of one tenth of one percent. But the fact that we have seen this voracious rebound over the past week or so, does it have legs? Well, I think if yields can stay fairly well behaved, it probably does. That's clearly been what's in the driver's seat for equities, even during the heart of earnings season. We're not quite finished with earnings, but I think yields have been more of the day-to-day, even intraday driver. It wasn't such a big move in either direction today, but I think if yields can even just stabilize, you're probably in okay shape for the market. But for whatever reason, if they start to move up a hundred than expected inflation report, then I think equities might struggle again.

And I think that raises the question, why have we seen yields come off after kissing 5 percent last month? Because the reason for the moves that we're seeing in treasuries is probably just as important in terms of what it means for equities as well. Yeah. Yeah. So on the on the way up, most of the move could be put in what is admittedly the catch all category of the term premium, given that it wasn't a function of some major shift up in inflation expectations or a major shift up in beyond just third quarter GDP report growth expectations. And I think in that catch-all category, you had concerns about increased supply. You had concerns about financing interest costs on the debt. You had concerns just about the demand side and what the yield would have to be in order to entice people to go out the maturity spectrum. But you also had positioning. There was a lot of

institutions that had positioned for continued move higher in yields, which of course means a move lower in prices. And I think there was some short covering that helped that reversal there. But it certainly was to the benefit of equities. And then you have to throw the much weaker than expected October jobs report into the mix in terms of the retreat in yields. And that also tied to why small caps sort of lost that boost they had for the last couple of days in October and the first few days in November. Lizanne, stay right there because the earnings results have started. Arm Holdings, first earnings report as a public company, are out. Christina Partsnevelis has those numbers. Christina.

Yeah, like you said, first ever earnings report, so we can't really compare its EPS of 36 cents, but it did beat on revenues of $806 million. The midpoint, though, of Q3 revenue guidance felt a little short of estimates, but the full-year revenue outlook is strong at a range of $2.96 billion to $3 billion, I should say. And the investment in AI helping drive its license revenue, keep in mind that ARM operates on a license structure, that's up 106% year over year. They also saw royalty growth, specifically in infrastructure and auto, which are two segments that saw weakness from other chip makers like OnSemi and Lattice. Arm says it does have good visibility of its licensing pipeline for the second half of the year,

although there is some uncertainty regarding the exact timing of some deals, as the trajectory of this semiconductor recovery is still unclear. You can see shares are just wavering between positive and negative, so about half a percent lower now. Okay. Christina Partsenevelis, thank you. Don't miss Jim Cramer's exclusive interview with Arm CEO. That's coming up at 6 p.m. Eastern on Mad Money Tonight. Lizanne, turning back to you, are you in the soft landing camp, or do you think that a recession has just been pushed to 2024 rather than overcome? Maybe maybe maybe neither. In a traditional sense, we've been calling the current cycle a series of rolling recessions because you've had hard landings in areas like manufacturing, housing, housing related. A lot of the consumer oriented goods that were big beneficiaries of the early part of the pandemic. You just had the later strength, the revenge spending on the

services side, services as a larger employer. So that helps to explain until very recently the resilience of the labor market. There has been some hope that maybe we were seeing improvement in housing and manufacturing, but both of those improvements were short-lived and fell by the wayside. So I continue to think that best case scenario is not really soft landing in a traditional sense, because we've already had hard landings in segments of the economy, but a continued roll through where if and when services get hit, you've got some offsetting strength elsewhere. Again, manufacturing and housing were seen as two areas that might provide that offset. For now, that doesn't look like the case. So I think more likely than not is at some point an official NBER declared recession. But I think it's important to take

a more nuanced approach in what is, of course, a very unique cycle. And of course, all this makes earnings that much more important. Lizanne Saunders, thanks for kicking off the hour with me. Thanks. Good to see you. We've got our big blue chip results out today. Disney, those are hitting the tape. Julia Boorstin has the numbers. Julia. That's right, Morgan. Disney reporting a big beat in earnings and a big beat in streaming subscriber growth.

The company reported earnings of 82 cents per share. That's 12 cents better than the analyst consensus. And a key reason for this beat, direct-to-consumer losses declining dramatically, plus the company announcing that it has increased what it's calling its annualized efficiency target to $7.5 billion. That's up from its previous cost-cutting target of $5.5 billion. Now, getting to revenue, revenue grew 5% to $21.24 billion. That's just a hair below the $21.32 billion that analyst consensus had been.

Now, this slight miss was due to the entertainment division. Sports and parks experiences were slightly ahead or in line. Now, Disney also gave some guidance this quarter. They say they, quote, expect to grow free cash flow in fiscal 2024 significantly versus fiscal 2023, saying this will approach levels last seen pre-pandemic. Now, I want to quickly dig into the all-important streaming division. The company added 7 million core Disney Plus subscribers. That's more than double the less than 3 million subs that analysts were expecting,

with average revenue per user for both core Disney Plus and Disney Plus Hotstar both beating estimates. And the direct-to-consumer operating losses decreased to $387 million from a nearly $1.5 billion loss in the year earlier quarter. Now, in its earnings release, the company did reiterate its guidance that this combined streaming businesses will reach profitability in fiscal Q4 of next year. And as the company breaks out ESPN for the first time, ESPN operating income grew 15% from a year ago, and ESPN Plus subscribers also beat expectations. I'm joined now by Disney CEO Bob Iger.

Thanks so much for joining me to talk about these results. Thanks. Nice to see you, Julia. It's great to be here. So I want to start off with the direct-to-consumer business. You reiterated that you're on track to hit profitability as planned, but a big beat on subscribers. You also recently just raised prices. And I'm wondering if you expect that subscriber growth to be able to continue. Well, we do expect subscriber growth to continue, but we're mostly focused now on delivering profitability by the end of fiscal 24.

You know, we had a great quarter, as you just noted, adding 7 million core Disney Plus subs. That was really the result of great content, particularly three strong movies, Guardians of the Galaxy 3, Elemental, and Little Mermaid. Disney Plus is proving to be extremely popular and in demand, and we feel very bullish about its future. So what does the future of your streaming bundle look like, especially given the fact that you're about to, or you're in the process of buying out the remainder of Hulu that Comcast, the NBC's parent company, currently owns?

And how much do you expect to have to pay over that base level that you already negotiated for that remainder of Hulu? Well, first of all, as you know, there's a floor price, which is obviously public, stated. We'll be writing them a check for that actually pretty soon. There will be an evaluation process that is dictated by the agreement that we reached with them a few years ago. I'm not going to say much more about that process, except, you know, we expect it will be fair and ultimately objective. And we're not concerned about the price that we will end up paying.

It's a great step for the company from a strategic perspective in that it gives us an opportunity to further connect the dots between Disney Plus and Hulu and ultimately offer even a three-play or a triple bundle with ESPN. There's three great sets of streaming assets, and in December, we will launch in beta form a combined Disney Plus and Hulu app. And then in sometime, probably in late March of fiscal, of calendar 24, excuse me,

it'll launch basically out of beta. We feel great about it because the combination will give us an ability to essentially lower customer acquisition costs, reduce marketing, hopefully reduce churn, and most importantly, create more engagement. And that's great for advertising. As you know, we have advertiser-supported subscriptions for both Disney Plus and Hulu. Actually, it's quite a bargain. If you're a Disney Plus subscriber, you'll be able to upsell and Hulu. Actually, it's quite a bargain. You'll be able to, if you're a Disney Plus subscriber, you'll be able to upsell to Hulu for $2 more with advertising

and vice versa for Disney Plus. So this is all a great step for us. And it seems like there's a big pressure, a big push, not just from Disney but from these other streamers as well, to really push subscribers to the ad-supported version of their services. How important is ad-supported going to be? And what kind of growth are you seeing in streaming advertising versus linear advertising? Because we've seen, and even in this quarter, linear advertising is really struggling.

Well, we can talk about both. First of all, we believe that the advertiser-supported streaming services, not just in the U.S., but in other markets, notably in EMEA, will be important growth initiatives for the company. In fact, in Disney+, we just implemented some really robust advertiser targeting tools that are already working and will help us obviously grow advertising.

By the way, speaking of advertising, addressable advertising is very strong. And since you raised it, so is sports, by the way. I would say in linear, it's actually a little bit better than it had been. Overall, we've seen some improvement in general in advertising. It doesn't mean we don't have more improvement ahead. We actually believe we do. For instance, technology sector has been a bit soft.

But advertising looms large for us. And the combination of Hulu and Disney Plus advertisers supported is a great opportunity for us to grow the advertisers supported side of our streaming business. And just to make sure to really hit the point on the linear business, you're seeing a strengthening market there or what's your outlook for Q4? Linear is better than many people assumed it would be, actually. It doesn't mean it's great, but we've seen some improvement. I want to make sure to hit on ESPN before we return to linear. You mentioned sports. Given the results that were broken out this quarter, the 15 percent increase in operating income for ESPN, what do these numbers indicate about the type of partnership you're looking for

for ESPN and when that might happen? I noted you mentioned that ESPN was up in the quarter and thus up in the fiscal year. It's actually up in operating income and in revenue in 22 and in 23. So great trajectory. And the ratings are actually very strong too. ESPN had one of the strongest years ratings-wise, I think, in the last four or five years in 23. That's a great thing. We obviously are planning to take ESPN out on a direct-to-consumer basis. We feel great about that. We believe we have an opportunity to strengthen that hand even more by bringing in one or

two strategic partners that can add either marketing support, technology support, or possibly content support. Why not go out with a stronger hand, for instance? And that's what we've been considering. We've been in discussions with a number of entities. I don't have anything specific to tell you right now, except I think you can expect us to elaborate more on that sometime in the near future. So there's been an expectation that this direct-to-consumer version of the flagship product will launch by 2025. Is that right? We've not said specifically what date we were targeting 2025. It won't be later than that.

And again, we're working hard to make sure that we've got the building blocks in place to see to it that when we bring it out direct to consumer that it is very successful. And we feel great about that, but we have an opportunity to consider some strategic partnerships that I think will make the transition even more successful. The NBA rights are the next sports rights that are up for grabs. How essential is it for ESPN to have those rights? And how problematic is it that you have these big tech companies pushing up the prices? Well, I'm not going to comment about the negotiation at all, except to say, I've said before, the NBA is very important to ESPN, has been for a long time. I should note that ESPN is important to the NBA too. We bring to not just the NBA, but to other sports organizations, a level of support, engagement with audiences, not just on linear television, but in podcasts, on radio, and online, and in apps, and I could

go on and on. That's quite valuable to these sports organizations, and I don't think that should be discounted. Well, we'll have to keep an eye on that one. I want to make sure we talk about the linear TV business, because the last time you were on CNBC with my colleague David Faber, you indicated you were exploring selling those linear TV assets. Since then, Disney was in a battle with Charter about what the future of traditional distribution should look like, and Charter really pushed to bundle streaming rights with digital. How did that battle and the resolution of that change the way you're thinking about potentially selling these assets? Well, first of all, I think what I said in that interview was that I think we were considering a number of options or everything was on the table or something along those lines. And I understand how that was interpreted, and it is what it is. We have been considering various strategic options for each of our networks, not necessarily all together, but each of them.

We do that as a matter of course for all of our assets because we're aiming to increase shareholder value, obviously. But it's interesting because while we've been actually taking a look at the linear networks, we have uncovered a number of really interesting opportunities to reduce costs and improve the business. And in fact, you have to look at the business in terms of its strategic value to the company too. Not only its financial value, and by the way, it is profitable still for the company, but it provides a lot of strategic support for ESPN. There are a number of sports shows on ABC, for instance, for ESPN. We also bundle with the distributors, ESPN and those linear assets. And those linear

assets are very valuable for streaming, Hulu and Disney+. So we are looking in an open-minded way, but that shouldn't in any way suggest that anything is imminent. It should suggest that as part of our ongoing process, we're, one, very, very realistic about the marketplace and the future of those assets. But we also are very mindful of their value to the company today and possibly into the future. And the charter deal, to answer your question, didn't really change our opinion about it. That was a great deal for us. I think it was also a very good deal for charter. It did enable us to reduce the number of channels that we were distributing through Charter, while also giving us some

great distribution for our streaming assets, notably Disney+. So kind of, I'll call it a win-win for us in that regard, and a real balance between traditional linear media and new media or streaming for us. But I don't think it really changed our outlook about the business. But does that mean that given that you're selling effectively a smaller bundle of channels to Charter that ultimately you'll have to shut down some of those channels? And do you think other distribution deals will follow in the same path as Charter's? Well, first of all, our core channels were part of the distribution deal. So when we talk about possibly shutting channels down, we have a lot of channels.

I've argued for a long time, possibly too many. I think that's true actually for the industry. Over time, with the growth of cable, a number of channels were created. I'm not sure that serves the distributor or the consumer that well, but that's maybe for another time. But I like the fact that we're focused on fewer channels. And I think I obviously love the fact that we're able to bundle a very, very core future asset for the company, Disney+, into that deal. You said that you're looking at all of your assets. Do you have plans to sell your India assets, India Hotstar assets? Any update there? I don't have an update. I'd say the same thing about them that I said about our linear networks. We're looking in an open-minded way.

We like being in business in India. We'd love to be able to strengthen our hand. I can't at this point predict where that will end up. I want to ask you about Nelson Peltz. The stock is down 24 percent since Nelson Peltz declared the proxy fight over. He indicated, and he has teamed up with Ike Perlmutter, who formerly ran Marvel, that he is perhaps preparing for more activist action against Disney. Have you heard from him? I had a call from him, but I must say I don't have specifics about what Nelson is really after or what he will ask for. I will say that, as has been the case in the past, that management and the board is always

willing to listen to what shareholders have to say. You know, we're in lockstep with the board in terms of our opportunities and our challenges and our strategic direction. We all feel very optimistic about the future of the company. I don't have anything more to add, really, about that. Although I will say, in terms of your comment about our stock price, we don't manage the stock price for short-term gains or on a short-term basis. We have a long-term view.

And, in fact, this past year has been spent fixing a lot of things that needed to be addressed, either because of decisions that were made or because of the disruption in the business. We've accomplished a tremendous amount. We remain very optimistic, in part because of how much we've accomplished, but also because of the strength of our team

and the strength of our assets. And so I think long-term, the picture for Disney shareholders is quite bright. Now, you just announced a new CFO, Hugh Johnston, who has dealt with Ike Perlmutter and his activist actions in the past when he was at Pepsi. Do you think he'll help you in any potential battle with him? First of all, we feel very fortunate to have been able to hire Hugh. I'm looking forward to working with him.

He starts in a few weeks. And he'll be helpful to us in a number of different ways. I'm looking forward to being a partner of his. Certainly a lot of different financial changes potentially. You are doubling down on the parks. That's one big financial change. Announced that you're investing $60 billion over the next 10 years. Are you concerned about

consumer spending waning, especially if there is not, say, a soft landing with its economy? Well, if you look at our track record, particularly the last five years of the parks, but you can look back another, say, 10 years, it's been stellar in terms of return on invested capital. The investments that we've made in that business just, by the way, domestically but also globally, have really paid off. And they've each paid for themselves in many ways. And since we make decisions about a capital allocation that are based on what we feel is the best way to deploy our money to deliver shareholder value, we felt in looking at the results of the parks that since the returns have been so strong, why not invest more?

It was as simple as that. The trajectory is very bright for those parks. You can look at the results today and see that not only are domestic parks doing well, we've got some difficult comparisons in terms of the Florida parks, but the international parks are doing extremely well, as is our cruise business. So when we looked ahead at how we'll allocate capital, and you mentioned the guidance that we gave about growing free cash flow in fiscal 24, we decided that a great place to place our bets or our capital is in the business that's delivered the best results. We're not concerned.

By the way, you look back, there have been all kinds of cycles in terms of the consumer, you know, dating back to 2008, 2009, for instance, or 2011 with what happened with the terrorist attacks. And again, those are, I don't want to say blips because they're significant, but they come and go and we've seen that. And we don't invest for any one specific time. We invest for the long term. Well, before we're out of time, I want to make sure to ask you about the strike. The Screen Actors Guild is still on strike. There are picketers outside of the lot where we are right now. From what I understand, there are negotiations happening perhaps even as we speak. And there's a lot of concern that if this actors strike drags on longer, it could really threaten the films at the box office. I know that your movie industry is

a big priority to you. What can you tell us about the state of negotiations and how this could really impact your business? Well, first of all, let me begin by saying I have the utmost respect for actors. They're an incredibly important part of the Walt Disney Company for obvious reasons. And we've been hard at work, we, the companies involved in this business, as well as SAG, the Screen Actors Guild, in trying to figure out a way to get them back to work. And I can only say that I'm optimistic that we'll figure that out relatively soon. In terms of the impact on the business, so far it's been negligible. Long term, meaning if the strike goes on much longer, it could become significant. Obviously,

we'd like to try to preserve a summer of films. The entire industry is focused on that. We don't have much time to do that. AMNA NAWAZ You think a week, two weeks before the summer is over? DAVID BROOKS I don't want to specify, except that we're all, SAG and the AMPTP companies, are very hard at work at trying to solve this. Well, we hope. As we speak. Yeah, as we speak. On behalf of everyone working here in Los Angeles, I hope that that resolution is soon.

Bob Iger, CEO of the Walt Disney Company, thanks so much for joining us here today at your headquarters. I know you have an earnings call coming right up. I do, Julia. Thank you very much. I'll send it back to you guys. Julia Borsten, our thanks to you for a fantastic interview and to Bob Iger as well, who shares a Disney hire right now. Let's bring in CNBC Senior Markets Commentator Mike Santoli for reaction.

Mike, that was a wide-ranging interview, a lot covered there, starting with the streaming properties, the Disney Plus subscriber numbers, the bundling of Disney and Hulu and a beta app, combining those two coming out in December. Ads supported, linear advertising doing better than some had maybe perhaps expected, all the strength around sports, and then, of course, the investments into the parks. I mean, pick your poison here. The stock's moving higher, though, on what what really was overall a very strong report. Yeah, I would say the theme is progress across the board and certainly on the cost side in general,

making their way toward that seven and a half billion dollars cost savings. And that's been evident in not just the free cash flow that the company delivered in the latest fiscal year. But, you know, just to to get detailed about what the company said and what Bob Iger said about their anticipation in the latest fiscal year. But, you know, just to to get detailed about what the company said and what Bob Iger said about their anticipation in the coming fiscal year, free cash flow could approach levels last seen pre-pandemic. Just to put numbers on that, it was about five billion in the past fiscal year. It was about nine point eight billion in twenty eighteen, essentially the year before the pandemic. That was the peak. They didn't say they're going to get there this year, but I just want to scale out what they're trying to at least have investors

anticipate. The fact that you had revenue stability in ESPN and operating income growth because of cost savings in ESPN is definitely probably just a relief to investors out there. Across the board, it's a company that seems not to have to make any hasty decisions based on kind of urgent financial needs because of the way things have stabilized. So I think that's probably the takeaway. Linear networks in general, still a bit of a drag, but not in an unanticipated way. Yeah, it's really turning out to be a very mixed, dramatically mixed bag for the media companies in terms of earnings and particularly where these streaming properties are concerned. I mean, Paramount

spiked last week after it said it was going to reach profitability on its streaming property sooner than expected. And then you look at WBD today, Warner Brothers Discovery. I mean, that stock just got slammed after management warned of headwinds persisting into 2024. Their leverage objective potentially imperiled. Looking to next year as well. And now we have Disney here, to your point, with DTC losses declining dramatically. Winners and losers. Can we say we have winners and losers? For sure. And the differentiation is about scale and business mix and how exposed are you to advertising revenues coming and going on in the case of the traditional linear networks? And do you have scale in DTC and streaming? Disney's closer to having scale, thinking that they're going to be able to get down to break even and maybe profitability in the direct toto-consumer business in streaming by the end of the fiscal year, so in September of next year. We'll see if that does come about.

And just getting to break even, of course, is not the end of the game. But I do think that that is the difference with Disney. And plus, 9% domestic growth in parks operating income. So international came back in a huge way. We knew that was going to happen. So they also have just other levers to pull at Disney. And, you know, of course, I was going to mention the specific pieces of content that he was going to attribute the growth in streaming subs to. And that would be the couple of Pixar movies and and a Marvel, you know. And so he wants to emphasize that the franchises still matter, even if they've lost some of their, you know, some of their glow. All right, Mike, stay close. We've got more earnings.

Affirm and Twilio, those results are out. Christina Partsenevelis has the numbers for both. Yeah, let's start with Affirm, a top and bottom line beat for the buy now, pay later provider, posting revenues of $497 million and an EPS loss of $0.57 a share, which was better than the $0.70 loss expected. Two important metrics for this fintech name are revenues, less transaction costs, and gross merchandise volume. an EPS loss of 57 cents a share, which was better than the 70 cents loss expected. Two important metrics for this fintech name are revenues, less transaction costs, and gross merchandise volume. Both of those, or gross merchandise volume, I should say, shows total dollar spent, and both of those did beat estimates. Delinquencies are down year over year, but did tick up in the quarter. Seasonality could be to blame. A major concern among a lot of fintech

names right now is how are they going to operate in a higher interest rate economy amid slowing consumer spend? Well, the CFO said in the earnings release, quote, we can deliver solid results even in a higher for longer interest rate scenario. And you see shares are up 10 percent. I'm going to pivot now to Twilio. You got a beat on the EPS earnings per share as well as revenue. The cloud communications platform did see Q4 revenues, this is the guidance, of $1.03 to $1.04 billion. I'm saying those specific numbers because that was just a touch higher than estimates. Q4 EPS guidance also came in higher than estimates, adding to the theme that maybe cloud spend is on the rise. And that's why shares are up 8%. Morgan? All right. Two big movers to the upside. Christina, thank you. Thanks.

Instacart and Lyft earnings are out. Deer Jabosa has those numbers. Hi, Dee. Hey, Morgan. These two gig economy companies are going in different directions. Let me start with CART because this is its first quarter as a public company, beat on the top line, and shares are up more than 3.5%. Revenue of $764 million versus $737 million. EPS loss of $20.86. We're not going to compare it though because this was, of course, its first quarter, the IPO quarter. Gross transaction volume up 6% and strong advertising growth of 19%. I spoke to CEO Fiji Simo who said that they're winning on market share in large baskets and she also cautioned that ad growth would moderate. Let's move to Lyft. Shares of

the ride-hailing company are down some 5%. It was a beat on earnings per share, $0.24 adjusted versus $0.13 estimated. Revenue, slight beat here as well, $1.16 billion versus $1.14 billion. Also, adjusted EBITDA of outlook of $92 to $82 million, that is above the guidance of 75 to 85 million. However, there were a few misses on the quarter, and that's maybe why you're seeing shares lower. Active riders and bookings missed the street estimate. Revenue up 10% year over year. So you can't help but compare that to Uber's 33% growth in mobility revenue. And in the current quarter,

it's only expecting mid-single-digit growth. Also, they did talk to about the quarter so far. They said they had record bookings and revenue around Halloween. But of course, that's just a small picture of the current quarter. Back to you guys. Okay. Deirdre Bosa, thank you. Those shares, Lyft shares are down 5% right now. Take-two interactive earnings are out as well. And Steve Kovac has those. Steve. Yeah, Morgan, shares are up 5% here despite some weaker-than-expected outlook here for the current quarter and some mixed results. I'll explain what's going on, but first let's get to the results. EPS coming in at a gap loss of 320. Now, we are not comparing that to estimates that we're looking for a gain of $1.03 per share on an adjusted basis. Revenue is pretty much right in line, $1.44 billion adjusted versus the $1.43 billion adjusted.

Now, you're seeing shares up 5% on top of the 5% again during the regular hours. That's because a report out earlier last or late last night saying they expect Take-Two Interactive to officially announce that new Grand Theft Auto game that would potentially go on sale next year. That's a huge moneymaker for the company. The call's going to get started just right now. They may announce it there, so we'll have more for you soon, Morgan. So the stocks, not necessarily moving on the results, but the anticipation that we get that announcement.

Exactly. Steve, thank you. Yep. MGM earnings are out. Contessa Brewer has those numbers. Contessa. Morgan, tough quarter for MGM with the cybersecurity hack

and the threat of a strike. But MGM Resorts manages to beat on the top and the bottom lines. Revenue of $4 billion. Consensus was 3.86. Earnings per share adjusted 64 cents versus the 49 cent expectation. The crucial profit metric here, EBITDA,

$1.1 billion. That's a slight beat. And we saw each segment topping expectations. Regionals, check. Macau, check. Las Vegas, check. In spite of the hit to the margin and the profits because of that cybersecurity attack. Big news for investors here. A new $2 billion buyout announced. And you can see the shares reacting up 3.5% in the extended trade, Morgan. Yeah, $2 billion stock buyback, right? That's a big deal. Okay. Stocks ire.

Thanks. Contessa Brewer. Mike Santoli, I'm going back to you because we just ran through a flurry of results. Where to start? Well, Mike Santoli, I'm going back to you because we just ran through a flurry of results. Where to start? It seems like consumers are still spending money on experiences. That's a good way to wrap it together. Yeah, for sure. And the take two move, by the way, is impressive in the sense that the stock was also a 5 percent in the regular session today. So it's tacking on. That's a you know, it's fairly specific to that industry, but it tells you something. The arm number, it feels as if guidance felt light given the revenue beat in the past quarter. So it didn't seem to kind of flow through the company, not willing to sort of endorse

that new run rate. So it seems like that's a reset year for arm and that we'll see if that has any real ability to impact the rest of Semi's arm is kind of operating a little bit of a corner. But Semi certainly been a very strong part of this market and its rebound. Yeah. Instacart comments from the CFO to Deirdre Bosa, too, about advertising potentially moderating. I think we're interesting as well. Mike Santoli, we'll see a little bit later this hour. When we come back, the head of credit at alternative asset Giant Aries says the volatility we're seeing in the market isn't a problem for his firm. It's actually an investing opportunity. He's going to join us right here on set to explain why.

Stay with us. Welcome back to Overtime Stocks. Off to the races this month after a big pullback in October, and the credit market has been up and down as well. But our next guest says the volatility isn't a problem for him. It's creating great investment opportunities. Joining us now is Kip DeVere. He is head of Aries Credit Group, one of the biggest players in the private credit market, with $269 billion in assets under management, under his purview. Joins me here on set. It's great to have you. Thanks for having me. Great to be here.

So let's start right there, because we keep hearing that it's private credit's moment. Is it private credit's moment, or is it just that growth that's already been afoot is now accelerating amid higher rates, wider spreads, and more restructuring in banking? I think it's a little bit of all of that, to be honest. It's a pretty long-running story now, where the banks have consistently gotten larger, consolidated, more heavily regulated. And with that has come just a lesser interest in dealing with the companies that we deal with, which tend to be smaller, middle market companies where we can lend, real estate, infrastructure, private equity, et cetera. So it's just a group of companies left behind for the private markets,

which are taking increased share. So what are the types of groups of companies that are left behind then? So it's changed a lot. I mean, when we started at Aries 20 years ago, we were financing much smaller companies. We were talking about businesses that had a couple hundred million of revenue and maybe 15, 20 million of EBITDA. Today, we're talking about a much, much broader fairway. So still those smaller deals, but we're playing in companies that have billions of dollars now of enterprise value, you know, 500,, $600, $700 million of EBITDA. So where are the opportunities then in that? Is it real estate?

Is it infrastructure? Is it something else? It's all of that. I mean, the transaction activity and the levels of activity are lower now just because I think with the change in the rate environment, obviously everybody's trying to figure out what assets are worth. Buyers and sellers are having a harder time transacting. But the easier piece for us has just been the continued retrenchment, frankly, from banks in the middle market. That's on the corporate side. But we're seeing great opportunities in infrastructure and in real estate, too. I think real estate's probably the slowest. It's the hardest to reset because so

many investors are long real estate and are trying to figure out what the value of what they own is today. So doing new transactions is harder. The corporate space is actually, I think, more active. But we're all getting questions about when's it going to pick up? Is 24 going to be busier? We think it will be. We think there are better transaction activity levels on the future. I do want to go back to real estate for a moment because the comment you just made with investors long real estate, does that mean we keep hearing that there's going to be this bigger, broader shakeout in commercial real estate, especially office. Is it because of how investors are positioned that maybe that's not going to happen or if it does happen, it's going to be a

much slower process? I think it'll take a fair amount of time. And I'll say this as a not real estate person and that team doesn't roll up into my world, but spending a lot of time with our real estate group, I think you have to segment real estate and take, you know, kind of prime office out because that's a very different discussion. Most of our real estate business, luckily, is actually oriented towards industrial and multifamily and non-office assets. So you really have to go kind of vertical by vertical to think about it. But, yeah, I do think it's going to take a while to materialize. Going back to the banks for a minute, because you did strike this $3.5 billion deal to take a loan portfolio off of PacWest's books during the summer. Do you compete with the banks?

Do you partner with the banks? I guess, what does this landscape look like as you do have regional banks that have had a really tough year, are existing in a higher-for-longer rate environment, and are rethinking their investment portfolios? Look, I mean, I think we do both, depending on what portion of the business you're talking about. In our lending businesses, our corporate lending businesses, the banks are our largest lenders, right? So when we go out and we raise equity for our funds, and we put modest leverage against that equity, we're getting that leverage from banks. So inherently, we're partnering with them in that simple way. We're also partnering with them on deals, right? But the PacWest situation was a little bit different. They obviously ran into some liquidity issues at their bank. That was a pure sale of very high-performing, high-quality assets to us at a very good price, I think, to them. So it's not like we did some sort of discounted purchase there. We paid a

full price for a good set of assets, but they just needed liquidity at the time. So we were opportunistic providing that liquidity. Okay. Quick last question for you, and that is, where do we go from here with this? If you do have a higher for longer rate environment, you mentioned deal activity potentially picking up next year. What is your outlook on the ability to service more companies, issue more loans, if that continues? Well, so at Aries, I mean, we feel great about our ability to transact. We have abundant liquidity, and we disclose every quarter kind of what our dry powder is.

And it's very substantial in all of our businesses, whether it's credit, private equity, real estate, et cetera. So we just need the buyers and the sellers of assets to start to find more agreement on what a transaction price is that works for both. We feel great about activity levels picking up into next year. Okay. Kip DeVere, great to have you here. Thanks so much. Great being here. Thanks. Well, coming up next, former ESPN CEO Steve Bornstein breaks down Disney's quarter and what Bob Iger just told us about the future of the sports network. Plus, we'll bring you the numbers that are sending Virgin Galactic stock sky high in after hours trading. It's up 15%.

Stay with us. Disney stock near its overtime session highs after reporting earnings just moments ago. Investors closely watching ESPN numbers that were being broken out separately for the first time. CEO Bob Iger talking about the future of ESPN exclusively on our air moments ago. We obviously are planning to take ESPN out on a direct-to-consumer basis. We feel great about that. We believe we have an opportunity to strengthen that hand even more by bringing in one or two strategic partners that can add either marketing support, technology support,

or possibly content support. Why not go out with a stronger hand, for instance? And that's what we've been considering. We've been in discussions with a number of entities. I don't have anything specific to tell you right now, except I think you can expect us to elaborate more on that sometime in the near future. Well, that certainly sounded like a tease, didn't it? Joining us now is Steve Bornstein, North American president of Genius Sports

and former CEO of ESPN and NFL Network. It's great to have you back on the show, Steve. That's exactly where I want to start with you, and that is what could a strategic partnership with Disney look like? Well, I think the strategic partnership would be the usual suspects, whether it be the leagues or big tech or even telecom. But what struck me by his comments was just the remarkable job that ESPN did this quarter. I mean, you know, its performance was outstanding. Ratings were up, advertising were up, and probably most importantly, engagement was up. Operating income as well, up 15 percent.

Subscribers beating expectations. Revenue growing as well. And again, another comment on, well, he said targeting 2025, but won't be later than that in terms of this full direct-to-consumer rollout of ESPN. He said that, and he said also something else that I think is just incredibly remarkable, that in this world of court cutting, the performance that ESPN delivered was extraordinary. It's remarkable that all those factors are up, and their digital presence is also increasing. Their fantasy numbers are fantastic. It just seems like they've done a heck of a job in a really difficult hand that they were dealt with the court cutting phenomenon being a real issue.

I guess walk me through how this is a flywheel. Whether it's ESPN and sports, whether it's the streaming properties and now the ability to start to bundle some of those together in a more meaningful way as Disney takes on full ownership of Hulu in the coming months. We know the different businesses of Disney all come together and sort of build up upon each other. But in this new streaming landscape, what does that actually look like and what is going to be the role of Linear overall in it? I think the real question is reach. What Linear delivers is an incredible amount of reach. You know, the NFL experiences that with their media partners, and Disney experiences that with all their multiple assets. So I think that what I heard, the comment I heard was that we're going to take these Linear networks and we're going to use them to reinforce not only our digital

properties, but our streaming properties as well. And that's a really smart strategy and one that you need to execute to win in this space. How important is ad supported to Disney? I mean, we talked about it a little bit in the interview, and we know that across the industry, we have a number of streaming properties where this is really being prioritized. How lucrative is that versus some of the offerings that have existed that don't include ads up until now? Well, yeah, I think what we have, what it's evolved to is that this hybrid method of both, you know, premium subscription pricing and advertising is the right model that hits the sweet spot of most consumers. And that's what I think Disney is really pioneering at this stage. Steve Bornstein, thanks for joining me.

Pleasure. Up next, we will run through all of the after-hours earnings movers that need to be on your radar as several analyst calls get set to kick off at the top of the hour. Welcome back. Check out Virgin Galactic soaring after a big bottom line beat with a loss of 28 cents per share versus estimates of a loss of 43 cents. Revenue beat as well, $1.7 million versus $1.1 million expected with strong revenue guidance as well. I say that with an asterisk since this is a company that's still only newly generating revenue over the past six months or so. CEO Michael Colglazer giving this update

in the release, quote, with our third quarter cash and marketable securities position of approximately $1.1 billion, we forecast having sufficient capital to bring our first two Delta ships into service and achieve positive cash flow in 2026. That's really what's sending this stock higher right now. And of course, it comes about 24 hours after the company announced more cost-cutting efforts, including a reduction in headcount. Those shares are up 13.5%, almost 14% right now. Up next, though, a man who knows a lot about space and other things, too, Jared Isaacman, astronaut and the CEO of Shift4 on the fintech firm's earnings beat

and why he is now actively exploring strategic opportunities and alternatives for the company. That comment helped send shares of shift four higher by almost 14 percent today to other side of this break. Welcome back. Shares of shift four soaring today. The company reporting Q3 results, beauty and profit estimates growing more than 80% year over year. But in a letter to shareholders, CEO and founder Jared Isaacman wrote about the pitfalls of the public market saying, we are actively exploring strategic opportunities and alternatives that will reduce distractions and serve our company, employees, and shareholders best. Joining us now, Shift4 Payments CEO Jared Isaacman. Jared, it's great to have you back on the show. You did have another strong quarter in terms of your earnings. You continue

to grow your top line by double-digit percentages, but it was that commentary in your shareholder letter that certainly got a lot of attention today. There had been some speculation that that might be the case. Walk me through the disclosure today and how you're thinking about the possibility of strategic alternatives. Yeah. Hey, thanks, Morgan, for having me back. Yeah, honestly, I think that's kind of old news. I mean, I think the reaction today in the stock was much more about the results that we delivered and the outlook we gave for 2024 with our volume bridge. I mean, look, the fintech market has not been treated very kindly for probably a couple quarters right now. And I think, you know, despite Shift4 delivering results really

superior to all our peers, we've been getting thrown out with the rest of them. So I've been saying about our interest in exploring alternatives for probably two quarters right now. Certainly people knew that, you know, when we were trading at like 42 bucks a share last week. I think the big difference you're seeing is that we delivered incredible results on across all every every KPI was a record and we expanded margins and free cash flow and set a good outlook for 2024. I think that's what you're seeing today. Yeah, let's talk about that outlook for 2024, because you closed the Fennaro acquisition and that is going to be one of those growth levers, this expansion that you have afoot into international markets. What

does this piece of the puzzle enable in terms of that growth? Yeah. So, I mean, look, Shift4 was started 24 years ago in my parents' basement when I was 16. Every single year for 24 years, we've grown revenue double digits through every downturn. And that's entirely within the United States, which is probably the most competitive payments market in the world. Now, after a 20-month process to close on Finaro, we have payment rails that open up all of Europe, the UK, other markets in Asia Pacific. So now we can take the products and services that have worked for us really well in the U.S., so like our ability to support stadiums, restaurants, hotels, e-commerce, travel and leisure, and now we're going to be able to go into the European markets and other

markets around the world on it. It's like a huge TAM expansion, you know, from what we already know works really well in the U.S. into other markets. Okay. Looking here at this market, though, I mean, your competitors like Toast. Toast tanked today. That company talking about weaker macro. Are you seeing the same? No, but we're also not pure playing restaurants like Toast. So, you know, I mean, certainly restaurants are like, call it a 30% or so of our volume. We're in hotels everywhere.

Like, that's probably our fastest growing vertical. UPS stores are customer retail. As you know, we do satellite broadband internet access. I mean, we are a really diversified company. So it's not like we're saying the macro is booming by any means. In fact, we called out generally flat same store sales growths, but we don't have that kind of pure play concentration in restaurants as Toast does. Okay. You did come out, though, last quarter and say you were going against junk fees, you know, that SkyTab, your restaurant point-of-sale solution, that you were going to go more aggressively after market share. Are you gaining it? We are. So, I mean, we reported sequential growth in our SkyTab installations this past quarter, which was already on a very high trajectory.

And I think like we've said for a while, you know, Toast is a great company. So is Chef Four. You know, at the end of the year, we're both going to win a lot of new restaurants that are out there. I think the fact that, you know, we have a, you know, our total cost of ownership of our solution is, I'd say, meaningfully less than what Toast offers just based on the analysis we put in our materials. We've got awesome employees, great distribution coverage that's out there. It's not hard to win when you've got a good product and it's priced right. Okay. Jared Isaacman, great to speak with you. Good to see you, Morgan.

Thank you. And shares of Shift4 did end the day up by about 14%. It was a mixed picture for the broader averages today, the S&P eking out a gain, the NASDAQ higher as well, but the Dow finishing down about 40 points, and the small caps, the Russell 2000 down about 1.1%. Disney earnings flying in after hours right now. We get a lot of calls kicking off here in the next couple of seconds,

so that's going to do it for us here at Overtime. Fast money begins right now.