Media giant and theme park operator Disney (DIS) is scheduled to report results of its fiscal second quarter after the market close on Wednesday, May 10, with a conference call scheduled for 4:30 pm ET. What to watch:

STREAMING: On February 8, Disney reported what CEO Robert Iger called "a solid first quarter," adding that the company was "embarking on a significant transformation" to reshape Disney around creativity while reducing expenses in order to better position it to "weather future disruption and global economic challenges."

With its last quarterly update, Disney reported 161.8M paid subscribers for its Disney+ streaming service as of December 31, 2022, down from 164.2M as of October 1, 2022. The company also reported ESPN+ paid subscribers of 24.9M in Q1, up from 24.3M as of October 1, and reported total Hulu paid subscribers of 48.0M, up from 47.2M three months prior.

In an interview the morning after the report, Disney CEO Bob Iger told CNBC's David Faber that "everything is on the table" with respect to Hulu. Disney owns two-thirds of Hulu, while Comcast (CMCSA) holds the remainder.

On April 18, Netflix (NFLX) reported Q1 results, including Q1 global streaming paid net additions of 1.8M, which missed the expectations of 2.1M members being added. However, immediately following the report, UBS upgraded Netflix to Buy with a price target of $390, up from $350, as the analyst sees Netflix as the main beneficiary of easing competition in direct-to-consumer streaming as peers focus on profits.

WHAT TO DO WITH HULU: On March 2, Citi said the firm believes Disney may sell its 67% stake in Hulu and secure the distribution rights to two Marvel characters held by Comcast - Hulk and Namor. Based on Hulu's level of profitability, the sale price and Disney's use of proceeds, there is a wide range of outcomes from $3 share downside to $13 of upside per Disney share, the analyst told investors at that time. For Comcast, the firm sees a balanced risk/reward of $2-$3 per share in each direction, while the strategic and financial merits "supports a positive move for the equity." Following Disney's results, the company seems less interested in a mass market direct-to-consumer offering, which raises the possibility that Disney may sell its Hulu stake, argued the analyst.

On March 15, The Financial Times' Anna Nicolaou and Christopher Grimes reported that "some of America's most prominent media executives" have counseled Disney CEO Bob Iger to sell the company's majority stake in Hulu, while some also suggested Iger spin off ESPN.

In a note after FT's report, Wells Fargo took the position that Disney is unlikely to sell Hulu, despite press reports and investors saying otherwise. There are questions on whether it should happen, but even more material is there is a lack of buyers, the analyst told investors at that time. While Disney CEO Bob Iger has said all options are on the table, and recent reports suggest he has been advised to sell Hulu, "it takes two to tango," and Disney's options to shed the asset are limited, contends the firm. Wells noted Comcast, believed by most investors to be the most likely buyer, has a 2024 put on its Hulu stake that is currently worth $9B. It is more likely that Comcast exercises that and pursues other deals, contended the analyst. Wells thinks investor expectations for Disney selling Hulu "have run too far too fast." Investors counting on a Hulu divestiture could be disappointed, it wrote, while keeping an Overweight rating on Disney shares.

WRITER STRIKE: On May 2, the Writers Guild of America said that after not reaching an agreement with Hollywood studios and streamers, its members will be on strike after their contract expired at midnight. "Your WGA Negotiating Committee spent the last six weeks negotiating with Netflix, Amazon (AMZN), Apple (AAPL), Disney, Discovery-Warner (WBA), NBC Universal, Paramount (PARA) and Sony (SNY) under the umbrella of the Alliance of Motion Picture and Television Producers," the union told its members. It added, "Though we negotiated intent on making a fair deal-and though your strike vote gave us the leverage to make some gains - the studios' responses to our proposals have been wholly insufficient, given the existential crisis writers are facing."

DESANTIS FIGHT: On April 26, in a lawsuit filed in a Florida district court, Disney said: "A targeted campaign of government retaliation-orchestrated at every step by Governor DeSantis as punishment for Disney's protected speech-now threatens Disney's business operations, jeopardizes its economic future in the region, and violates its constitutional rights." The company added, "Disney regrets that it has come to this. But having exhausted efforts to seek a resolution, the Company is left with no choice but to file this lawsuit to protect its cast members, guests, and local development partners from a relentless campaign to weaponize government power against Disney in retaliation for expressing a political viewpoint unpopular with certain State officials."

The next day, Wells Fargo's analyst said the political situation in Florida creates key headline concerns for investors. While it's "never ideal for a public company to be embroiled in a political dispute," the firm does see the lawsuit against Governor DeSantis and the board members of the Central Florida Tourism Oversight District removing near-term risk to Disney's Orlando operations. While Wells does "not claim any legal expertise," it says it seems reasonable that the business implications of the suit will be to reduce day-to-day meddling by the new board into Disney's operational affairs in Orlando. Each side is likely to continue to lawyer up, but it may be "business as usual" at Walt Disney World during the legal process. If correct, this would seem a positive for Disney regardless of the case's outcome, the firm argues. Wells has an Overweight rating on Disney shares.

PARKS: In a note published earlier this week, Morgan Stanley raised the firm's price target on Disney to $120 from $115 and kept an Overweight rating on the shares. The firm has raised estimates after incorporating cost cutting measures, noting that it views the shares as "compelling here." The firm sees strong adjusted EPS growth ahead, as it contends that the Parks business "generates compelling growth through cycles" and it expects this segment to represent the majority of Disney's segment EBIT for "years to come." However, it adds that Disney's Media business is "under-earning and under-valued." The streaming-first strategy of the last two years diluted Media earnings power, but "there are opportunities to rebuild," Morgan Stanley added.

CONSENSUS: In terms of overall results for the second quarter, analysts are calling for Disney to report total revenue of $21.78B. The consensus Q2 earnings forecast stands at 93c per share, down from where it stood 90 days ago at $1.19 per share. For the June-end quarter, analysts' consensus currently calls for revenue of $22.86B and for the "House of Mouse" to post a profit of $1.29 per share, according to data from Refinitiv.

SENTIMENT: Click here to check out recent Media Buzz Sentiment on Disney as measured by TipRanks.