Disney Shanghai And The True Growth Driver For The House Of Mouse

Investors who think that Walt Disney Co DIS's main growth drivers are movies, toys, or ESPN are wrong, at least according to Barton Crockett of FBR Capital Markets.

Surprising or not, Disney's theme parks are the main drivers of earnings, Crockett explained as a guest on CNBC's "Squawk Box" on Friday. Leading the way among Disney's handful of theme parks is Disney Shanghai, which is celebrating its first year of being open to the public and welcoming 11 million visitors.

"We were arguing that this was on pace to be the most profitable Disney park globally," Crockett said. "I believe we were above [Wall] Street at that time and I think everything's played out pretty close to what we thought."

Disney spent $5.5 billion to turn its vision of a theme park in Shanghai into a reality and it took 17 years to do so. Meanwhile, expectations were calling for the park to host 10 million visitors in the first year, but needless to say the addressable market in China is substantially higher.

By comparison to a hot theme park business, Disney's ESPN unit is a "grind" and highlighted by ongoing pressure in the TV ad business. Meanwhile, the subscriber numbers will continue serving as a "constant worry" to investors.

Disney's movie business has been "heroic" over the past few years, but may have peaked and the studio is stuck in a cycle of releasing sequential that are decreasing in appeal.

Related Link:

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