ABC and ESPN parent Disney (DIS) is scheduled to report results of its fourth fiscal quarter after market close on November 9, with a conference call scheduled for 4:30 pm ET. What to watch: 1. M&A: Results will almost certainly take a back seat to investor interest in any commentary the company will offer on recent reports that 21st Century Fox (FOXA) has held talks to sell most of the company to Disney, though no discussions are said to be currently ongoing. CNBC’s David Faber noted that Disney can’t own two broadcast networks and would therefore not purchase the Fox broadcast network, nor would it buy Fox’s sports programming assets, Fox News, or its Business channel. During their own earnings conference call last night, Fox executives said their long standing policy is not commenting on corporate activity or speculation and that they would not respond to any questions about recent “press speculation.” It is very likely that Disney will take a similar stance, though any more general comments about its position on M&A will be dissected. 2. STUDIO: Disney and Marvel Studios’ “Thor: Ragnarok” opened to $121M from 4,080 theaters in North America. Overseas, the threequel grossed $151.4M in its second weekend for a foreign tally of $306M. The film, which earned a 93% score from Rotten Tomatoes, kicked off what is expected to be a big end of the year for Disney’s studio, with Pixar’s “Coco” and “Star Wars: The Last Jedi” coming up next. 3. ESTIMATES, RATING CUT: In its Q3 report, Disney announced Cable Networks revenues for the quarter decreased 3% to $4.1B and operating income decreased 23% to $1.5B, with the lower operating income attributed to a decline at ESPN. Piper Jaffray analyst Stan Meyers recently lowered his Q4 earnings per share estimate for Disney to $1.16 from $1.35 to reflect lower ratings at ESPN, weaker than expected sales of Cars 3 consumer products, the closure of Disney World related to Hurricane Irma, and incremental BAMTech investment. Meyers, however, remains upbeat on the shares citing the “strong” film slate, growth from recent and upcoming carriage renewals, and continued momentum at the parks. He kept an Overweight rating on Disney with a $130 price target. Also in the last few weeks, Morgan Stanley analyst Benjamin Swinburne lowered his price target on Disney to $120 from $130, citing dilution from its pivot of its TV and film distribution model to over-the-top, or OTT, lower subscriber estimates for cable networks and trimming his advertising outlook for ABC and ESPN. However, he believes the market continues to under appreciate the OTT asset Disney is building or the diversification of the business overall, leading him to maintain an Overweight rating on the stock. On October 12, Guggenheim analyst Michael Morris downgraded Disney to Neutral from Buy, citing his increased caution toward pay-TV trends and concern that expectations for the contribution from its content cycle are too high. While he is optimistic about the company’s proposed direct-to-consumer streaming products, he expects the initial investment and long lead time into the launch to weigh on sentiment over the next 12 months. The analyst, who lowered his price target on Disney to $105 from $122, also downgraded Viacom (VIAB) and AMC Networks (AMCX) the same morning.