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DISNEY

 Netflix CEO: All TV will be Internet in 10-20 yrs

While Jim Cramer is in San Francisco this week, he has heard about all of the snazzy start-up
companies with disruptive technologies that could possibly take over the world one day. But

what about a company that is already conquering the globe?

Netflix is the video streaming colossus that not only allows for TV shows and movies to be
streamed, but also creates its own original programming. It reported a fantastic quarter in July,
with confirmation that it added 3.3 million new subscribers. It is also expanding its international
footprint substantially, and Cramer thinks it could even take over the whole world by the end of
the year next year if it wanted to.

Cramer had the opportunity to speak with Netflix Chairman and CEO Reed Hastings to
discuss the current environment of the Internet, how Netflix obtained rapid success and where it
could be headed in the future.

Cramer pointed out that 13 years ago, Netflix traded at just 85 cents a share; it closed at
$102 a share on Friday. Hastings explained the fast growth of the company, stating "It's really
the Internet. The Internet is transforming so many sectors of our economy, and we are Internet
TV; and that sector has grown from very small 15 years ago to starting to be significant now."

"We are just a learning machine. Every time we put out a new show we are analyzing it,
figuring

out what worked and what didn't so we get better next time"

In fact, Hastings predicted that in the next 10 to 20 years, all of television will be on the Internet.
He added that he was willing to bet that the Internet would be a fast growing industry when he
first started Netflix because he saw the incredible consumer experiences that the Internet
allowed.
Hastings attributed the success of original programming such as "Orange is the New Black" and
"House of Cards" to Netflix's powerful data analytics.

"We are just a learning machine. Every time we put out a new show, we are analyzing it, figuring
out what worked and what didn't so we get better next time," Hastings added.

 Read more from Mad Money with Jim Cramer

Even more impressive, the stock remains the best performer in the S&P 500, up more than 100
percent for the year. Could the recent pullback in the stock be a window of opportunity?

"When you get this kind of retreat in the stock, historically—as I always tell you, through thick
and thin—it's been a terrific buying opportunity. Worst case, it goes lower and you can buy more
at even cheaper prices before it rebounds," the "Mad Money" host said.

Investors were shaken on Aug. 4, when Disney reported earnings and indicated that it had
suffered some subscriber loss. This bolstered fears that consumers were cutting the cable cord
and flocking to subscription services such as Netflix.

"There are a few people that have cut the cord, but it is very, very small still today. But it's a
worry about the long term," Hastings said.

Hastings anticipates that sports networks that have had such success in maintaining an audience
will ultimately adopt an on-demand model. Consumers will be able to watch any game on any
device in the future, just as companies such as HBO currently provide.

Questions for Cramer?

 Disney, Netflix Bringing 'The Force' to Latin America -- a Good Investment?

"We rate NETFLIX INC (NFLX) a HOLD. The primary factors that have impacted our rating
are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify
the expectation of either a positive or negative performance for this stock relative to most other
stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth,
expanding profit margins and solid stock price performance. However, as a counter to these
strengths, we also find weaknesses including deteriorating net income, generally higher debt
management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

NFLX's revenue growth trails the industry average of 34.0%. Since the same quarter one year
prior, revenues rose by 22.7%. This growth in revenue does not appear to have trickled down to
the company's bottom line, displayed by a decline in earnings per share.
 The gross profit margin for NETFLIX INC is currently very high, coming in at 84.02%. It has
increased from the same quarter the previous year. Regardless of the strong results of the gross
profit margin, the net profit margin of 1.60% trails the industry average.

The company's current return on equity has slightly decreased from the same quarter one year
prior. This implies a minor weakness in the organization. When compared to other companies in
the Internet & Catalog Retail industry and the overall market, NETFLIX INC's return on equity
is below that of both the industry average and the S&P 500.

 Why China Jitters Shouldn't Jolt Disney's Shanghai Theme Park

LOS ANGELES (TheStreet) -- Disney's (DIS) $5.5 billion bet that the Shanghai Disney
Resort will help relieve mounting pressure on its television businesses has put investors on edge
as Chinese equity markets continue to fall.

Yet concerns that slowing growth in China, the world's second-largest economy, could lessen the
number of visitors to its Shanghai park, may be overstated. The park, scheduled to open in the
spring of 2016, could still be a great success even as China's benchmark Shanghai Composite
Index fell 1.3% on Wednesday, extending its month long decline to 28%.

For starters, China's slumping macro-economy and slowing manufacturing sector may not hurt
middle-class consumers as much as might be ex[ected.

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"The collapse of the equity bubble tells us next to nothing about the state of China's economy,"
Capital Economics wrote in a note, according to The Financial Times. "In fact, recent data have
been more positive than the headlines might suggest, with large parts of the economy still
looking strong."

China's estimated 230 million middle-class consumers and their thirst for American goods and
entertainment are central to Disney's effort to grow its parks, film and consumer products units.
The company's largest unit and profit center -- television, which includes ESPN and ABC -- has
been hit by declines in advertising revenue and fewer cable subscribers. Disney shares were
gaining 0.5% on Wednesday to $96.40, trimming its decline over the past month to 19%.

The worry about China's economy and what effect that could have on U.S. multinationals points
to the difficulty in grasping the overall health of its economy, as many indicators, notably gross
domestic product, are widely viewed as unreliable.

 Disney CEO Showcases Plans for $5.5 Billion Chinese Theme Park
 NEW YORK ( TheStreet) -- Disney (DIS) is taking its theme parks to the Chinese market.

The movie giant is scheduled to open its Shanghai park in the spring of 2016, featuring
Tomorrowland, Treasure Cove and Mickey Mouse
adventure sections, designed to bring the Disney brand to middle class Chinese families.

Characters from Starwars and Marvel comics will also appear.

Disney is partnering with local Chinese developers to build the 20-square-kilometer, $5.5 billion
project which represents the company's largest ever foreign investment.

announced that he hopes to blend the Disney experience with authentic, Chinese culture and is
optimistic about China's future prospects.
While showcasing the designs in Shanhai, Iger told the crowds that the park "not only showcases
the best of Disney's storytelling but also celebrates and incorporates China's incredibly rich
heritage to create a one-of-a-kind destination that will delight and entertain the people of China
for generations to come."

The development comes amid investor concerns about China's economic slowdown.

Though Disney has had a good track record with movie releases in China,

many of its animated characters are not well known in the country.

The park will also have to compete with the new Universal Studios theme Park being
constructed in Beijing. The Disneyland complex will also include international shopping, hotels,
an ornamental garden and dining experiences.

Disney stocks were up on the news of the project.

Disney opened a Disneyland resort in Hong Kong ten years ago.

Last year the park received about 7.5 million visitors, 48% of whom were from the Chinese
mainland.

Disney executives say they have learned valuable lessons from the Hong Kong park, which
struggled with long lines and food supply issues when it first opened.

 Disney exploring virtual reality for video games

LOS ANGELES (Reuters) - Walt Disney Co's interactive unit is considering bringing Disney
Infinity or other video games into the world of virtual reality.
 Adapting elements of current titles is one option the company is exploring, James Pitaro,
president of Disney Interactive, said in an interview. Disney also might create new games
specifically for VR or for another emerging platform known as augmented reality, he said.

Virtual reality headsets offer a 360-degree view that immerses players in fantasy settings, while
augmented reality projects computer images onto real-world settings.

The technology has been touted for decades but never reached mass adoption, and the
entertainment industry is debating whether it will take off this time.

Disney Infinity, which has achieved $1 billion in global retail sales, mixes characters from
Disney, Pixar and Marvel franchises. Star Wars will come to the new edition set for release this
fall. The game includes a "toy box" mode allowing players to mix backdrops and characters from
different franchises.

"You could easily imagine a scenario where we were to expand the toy box component of
Infinity into AR or VR," Pitaro said in an interview at the E3 video game conference, although
he added Disney does not have that project or any other VR projects in development.

Disney is talking to the VR "platforms," he said, without specifying which companies. Facebook
Inc's Oculus unit, Sony Corp and other companies will offer modern VR headsets to consumers
later this year and next year.

Microsoft Corp generated buzz at E3 with a demonstration of its HoloLens AR headset using the
Minecraft game.

Pitaro said he was impressed with recent VR technology and was enthusiastic about its
possibilities.

"I do not think this is going to be a fad," Pitaro said.

Some other companies showed VR prototypes at E3. Ubisoft, for example, demonstrated an
experience that features its Rabbids characters and makes viewers feel like they're riding a roller
coaster.

Other gaming executives have voiced caution, waiting to see if consumers embrace VR.

Barclays analyst Christopher Merwin said he believes VR will become a viable platform,
eventually. Consumers will likely wait until there is a enough software available to justify the
cost of VR hardware, he said.

"Virtual reality is the future but it will take time," Merwin said in a research note.

 Disney opens its largest store in Shanghai

 has opened its first Disney Store in China, a 9,257-square-feet store in Shanghai that is the
company’s largest retail store in the world.

The new store, opened May 20, comes as Disney strives to tap into China’s growing middle
class. The store is in Shanghai’s Pudong district, where Disney plans to open a $5.5 billion
theme park next year.

We couldn't be more delighted to open our first Disney Store in China, in Shanghai," Paul
Candland, Disney’s Asia-Pacific region president, said in a statement. "Disney Store plays a
critical role in how millions around the world experience our brand and allows kids, young adults
and families to have a uniquely fun and immersive experience while shopping for their favorite
Disney, Pixar, Marvel and Star Wars products.”

The new Shanghai store showcases a 19-foot castle at the heart of the store, featuring an hourly
musical and projection show, and a Marvel-themed area with hand-sculpted statues of
superheroes. Its exterior includes a landscaped plaza and Mickey Mouse-shaped roof sculpted
with 8,000 LED lights visible from key tourism points such as the Pearl Tower.

Disney, which opened a theme park in Hong Kong in 2005, broke ground on its Shanghai theme
park in 2011. A day before the Shanghai store opening, the company put the top on the
Enchanted Storybook Castle at its Shanghai park. Disney also has a theme park in Tokyo.

The Disney Store chain is the retail merchandising arm of Disney Consumer Products, the
business segment of Burbank-based Walt Disney Co.(NYSE: DIS) and its affiliates that extends
the Disney brand to merchandise. There are currently more than 200 Disney Store locations in
North America, 40 locations in Japan and about 70 stores in Europe.
 Enlarge

Disney's first retail store in China is in the Pudong district of Shanghai.

Walt Disney Co.

Disney said an estimated 40 million tourists visit Pudong’s Lujiazui shopping area, where the
store is located.

 Disney posts another strong quarter as its clout grows

Robin Diedrich, an analyst at Edward Jones Research, said that the success of the new
"Avengers" film and other Disney movies gives the company "a little more leverage than other
brands, frankly, in going to talk to theater owners." (Jay Maidment / AP)

Walt Disney Co. posted another quarter of double-digit profit growth, the latest sign of the
Burbank entertainment giant's snowballing financial clout.

The stellar second-quarter earnings — $2.1 billion — sailed past Wall Street projections and sent
the company's stock to an all-time high.
 Hitting these marks has given Disney Chairman and Chief Executive Robert Iger a coveted
currency: Analysts say the company is increasingly asserting its will in disputes and negotiations.
In recent months, the entertainment giant has sued Verizon Communications Inc. over a new
television service and clashed with theaters owners over discount tickets.

"There is no question that Disney has a lot more leverage today than they did even a year or two
ago — whether it is digital, or movies or television," said Tuna Amobi, an S&P Capital IQ
analyst. "They have become much more of a 'must have.' They have more franchises than ever."

On a conference call with analysts Tuesday, Iger fielded several questions about how the
company has leveraged its strong position — including with last week's release of "Avengers:
Age of Ultron." The Marvel Studios movie scored the second-biggest U.S. box-office opening
ever and has grossed more than $650 million worldwide since its release Friday.

'Avengers: Age of Ultron' is full of thrills but quickly forgettable

Disney imposed new rules on when theaters could show discount screenings of its films,
including "Avengers." The company has also sought to change the way ticket sales revenue is
calculated in some instances.

The dispute centers on terms of a licensing agreement amended by Disney in March.

In a recent letter to Disney, John Fithian, president of the National Assn. of Theatre Owners, said
he had received "an avalanche of complaints, concerns and fears" from his members over the
licensing agreement.

Fithian's letter also cited concerns about Disney's stipulation that it would use a national average
ticket price as the basis for calculating box-office revenue splits in certain circumstances, rather
than the standard practice of using local market prices. Such a practice, Fithian wrote, would
discourage theaters from offering discounts and lead to a "cycle of price increases" that may
violate federal and state price-fixing rules.

The strategy, along with a continuing string of hits, has resulted in a remarkable run of profits.
Net income jumped 10% in the second quarter over the same period last year — marking the
sixth time in the last seven quarters that Disney has recorded double-digit profit growth.
 Robin Diedrich, an analyst at Edward Jones Research, said that the success of the new
"Avengers" film and other Disney movies gives the company "a little more leverage than other
brands, frankly, in going to talk to theater owners."

Disney has become a kingmaker of sorts in the world of streaming media because of the value of
its properties and brands, which include ESPN, the Disney Channel, Pixar Animation Studios
and Marvel.

Iger explained, for example, why Disney made a deal to put its content on Sling TV, the over-
the-top streaming service that Dish Network recently launched.

He said that Disney found Sling TV appealing because it targets "broadband-only" homes — or
those without cable or satellite television subscriptions. The inclusion of ESPN and other
Disney-owned networks has been seen as a coup for Sling TV.

However, Disney did not make a deal with Sony's relatively similar Vue service, which runs on
the PlayStation gaming system. Iger was succinct in his appraisal of Vue: "Simply put, it wasn't
to our advantage financially.

Diedrich said Disney has exacted price increases from distributors that want its content. "Now
it's even more important as distribution is expanding," she said.

Iger also discussed a lawsuit filed by Disney against Verizon over a slimmed-down FiOS
television package offering that includes ESPN as part of a sports bundle.

The lawsuit, filed last month in New York State Court, alleges that Verizon has violated
contractual agreements that prohibit ESPN channels from being in a separate sports package.

"We were simply asking them to adhere to the contract that they had negotiated with us," Iger
said.

Iger also took time on the call with analysts to highlight successes from the quarter that ended
March 28. The company delivered earnings of $1.23 a share, besting analyst predictions of
$1.11.

The company's domestic theme parks and its consumer products business were profit drivers
during the quarter.

Disney's parks and resorts unit posted operating income of $566 million, a gain of 24% from a
year earlier. The company said the strong performance was partly because of increased guest
spending at its domestic properties.

The company's consumer products division reported operating income of $362 million,
compared with $274 million a year earlier. Disney attributed the improvement partly to an
 increase in the licensing of merchandise from the hit animated movie "Frozen," which was
released in 2013 and grossed more than $1 billion.

Disney's largest unit, its media networks division, posted operating income of $2.1 billion —
down 2% from a year earlier. Revenue rose 13% to $5.81 billion.

On Tuesday, Disney's stock hit an all-time high of $113.30 in intra-day trading. It closed down
22 cents, or 0.2%, to $110.81.

Times staff writer Richard Verrier contributed to this report.

 Verizon Says It Can Slice & Dice Out ESPN

Verizon Communications Inc. (NYSE: VZ) reiterated its contention Tuesday that splitting ESPN
from its core cable TV offerings doesn't violate a contract with Walt Disney Co (NYSE: DIS).

Disney, parent of ESPN, on Friday said Verizon's plan isn't authorized by its existing
agreements, according to multiple news reports.

But Verizon Chief Financial Officer Francis J. Shammo told analysts Tuesday that "we believe
that we are allowed to offer these packages under our existing contracts."

According to a conference call transcript, Shammo was asked whether Verizon had "explicit
permission" from Disney for the offering, but Shammo said "we'll leave it at that."

Shammo's comments were reported by re/code.

Verizon FiOS President Tami Erwin made the same claim last week, telling The Wall Street
Journal that the packages don't violate its content contracts.

The FiOs unit, which launched the new plan on Sunday, offers bundled Internet access,
telephone, and television service via a fiber-optic network.

Re/code said Tuesday that Verizon has done little marketing of the new bundling plan to date.

"Perhaps Verizon would like to get a full endorsement from the programmers before it makes a
big push," according to re/code.

 Disney Movies, Digital Seen Clicking, Yet Downgraded

 Walt Disney Co.'s (DIS) digital distribution strategy is clicking, but the media giant's core
broadcast TV and cable networks are still vulnerable to shifts in video consumption, says BTIG
Research, which downgraded the stock on valuation.

Disney stock was up a fraction in midday trading in the stock market today, near 107.

Disney stock has a strong IBD Composite Rating of 96, and it's up more than 30% over the past
12 months as it hones its online video strategy and benefits from the ever-rising need for quality
content.

IBD's Media-Diversified group ranks No. 8 out of 197 industry groups. It includes Viacom
(VIA) and CBS (CBS).

Among U.S. households, 41% now subscribe to a video streaming service, up from 36% a year
earlier, says market research firm Nielsen.
 "Disney is clearly best-positioned among its broadcast/cable network peers, with its must-have
sports-driven ESPN networks and non-advertising driven Disney channels," said BTIG analyst
Rich Greenfield in a research report Monday. "However, we are increasingly struggling with the
question of whether anyone in the sector can flourish as consumer behavior shifts away from
traditional television viewing, not to mention a complete lack of interest in wasting time on
commercials."

He downgraded Disney stock to neutral from buy. Disney owns the ABC Television Network
and other channels besides ESPN, along with its movie studio.

Disney last week said it's working on a sequel to movie blockbuster "Frozen," the highest-
grossing animated film of all time.

"There is virtually unanimous agreement among investors that Disney's upcoming releases,
'Avengers: Age of Ultron' and 'Star Wars: The Force Awakens,' will be huge," added Greenfield.
"We believe it is important, however, to consider what a miss by one of these franchises might
look like. In addition to lower theatrical contributions, the impact of a less-than-blockbuster
release would have important ramifications to Disney's related consumer products, interactive,
and possibly theme parks businesses, as the franchises are pushed through the Disney machine."

 Disneyland raises ticket prices to just short of $100

The priciest place on Earth?

Disney raised ticket prices for its theme parks Sunday, including Disneyland and California
Adventure in Anaheim.

An entry ticket to either park climbed $3 to $99 for those over 10 years old.

Want to ride both the Matterhorn at Disneyland and California Screamin’ at California
Adventure in the same day? A two-park ticket now costs $155, up from $150.

Disney also hiked prices at other parks. A one-day ticket to the Magic Kingdom at Walt Disney
World in Florida is now $105, up from $99.

The price jump is just the latest for Disney. Last May, the company upped Disneyland tickets by
$4 to $96 and temporarily halted new sales of a very popular annual passes for Southern
California residents.
 The passes, which are blacked out for Saturdays and major holidays, are only available for
renewal to people who had purchased them before. The price to renew those passes rose from
$379 to $389.

Industry experts say the theme park halted the sale of new passes because Southern California
visitors had been crowding out higher-spending guests who traveled from further distances.

The latest increases come as Walt Disney is logging record attendance at its theme parks. The
company reported that domestic park attendance rose 7% in the three months that ended Dec. 27,
a record.

SoCal residents can buy a two-day ticket (one park per day) for $139 and a two-day Park Hopper
ticket (both parks, both days) for $178. By comparison, two-day adult tickets usually cost $178
and $217, respectively, according to the park's website.

Three-day tickets -- one park per day plus a Magic Morning early entry -- cost $169, and $208 to
make it a Park Hopper ticket. Ticket prices apply to all ages; blackout dates are March 20-April
4.

The offer is good for California residents in ZIP Codes 90000-93599 and residents of Northern
Baja California, Mexico, in ZIP Codes 21000-22999. Visitors may buy up to five tickets per
person each day with a valid ID.

 Amazon in Another Pricing Dispute, Stalls Disney DVD Pre-Orders

E-commerce giant Amazon.com Inc.’s (AMZN) online pricing war continues. After media giants
Hachette and Time Warner Inc's (TWX) Warner Brothers, it is Walt Disney Company’s (DIS)
turn to feel the heat. Amazon has withheld DVD pre-orders of Disney's smash hit movies
including Captain America: The Winter Soldier and Maleficent, repeating its tactics to extract
better pricing terms. Neither party was available for comment.

The sale of movies and DVDs generate only a small part of Amazon’s revenues as compared to
stores like Wal-Mart and Best Buy (BBY), which at times price new launches below their retail
cost to attract customers.

On the other hand, for studios, DVDs and Blu-ray versions of their movies help generate a
 significant amount of profit because very few movies attain profitability in theaters. Given
Amazon’s clout in the home entertainment market, it tactfully uses its dominance by putting
pressure on vendors. In this case also Amazon appears to have an edge over the Hollywood
studio.

Amazon has in the past withheld sales of certain products as a part of its strategy to gain leverage
in negotiations with content providers. It has previously applied such bargaining tactics against
Hachette Book Group by pulling out consumers’ pre-orders for books and postponing shipments
of the publisher.

Amazon is facing criticism from authors and other insiders in the publishing industry, who allege
that the e-commerce giant is exploiting its position as a major retailer to extract better pricing
terms from its suppliers.

While the pricing disagreement between Amazon and Warner Bros. did not last long, the
disputes with Hachette and Disney will likely continue.

The e-tailer is under a certain amount of pressure from investors who are increasingly
unimpressed with its huge investments that continue to yield low returns because of its
aggressive pricing strategies.

 Disney CEO rebukes tax inversion mania

CEO Bob Iger said although the company battles with a very high corporate tax rate he ruled out
doing an inversion, adding that he doesn't think threatening to relocate overseas is the right
approach.

"I don't really think moving Walt Disney Company outside the U.S in order to save taxes is an
option, nor do I think it would be the right thing to do for the company or for this country," Iger
told CNBC Tuesday.

However, he said tax reform would strengthen the economy and make the U.S. more competitive
internationally.

"We're in great need of tax legislation as a country. The corporate tax rate is too high. There are
too many loopholes. Congress is not getting off the dime and addressing it and they really
should."

The Walt Disney Co. reported quarterly earnings and revenue that beat analysts' expectations on
Tuesday, boosted by strong results from its movie studio and consumer products division.

But, shares wavered in after-hours trading.

The Walt Disney Co. reported earnings of $1.28 per share on revenue of $12.47 billion, up 8
percent from a year ago.