Disney’s leadership is facing a major challenge to get the company back on the right foot.
But now it is facing what was once unthinkable.
And Disney took everyone by surprise when it admitted to having this bad problem.
Disney’s theme park business begins to suffer
Disney’s stock has plummeted about 57% from its high of nearly $200 when the pandemic began in March 2021.
The company’s movie and streaming business has suffered from numerous bombs that have been panned for their excessive wokeness.
Disney’s theme park business, which escaped the woes of the rest of the company after going woke, is beginning to slow down.
A disappointing third quarter for the company included a warning about the future.
Disney’s Experience division, which houses its theme parks, cruises, and consumer goods, saw a 3% year-over-year decline in revenue.
“Segment revenue growth was impacted by moderation of consumer demand towards the end of Q3 that exceeded our previous expectations,” Disney stated.
The slowing economy and lingering inflation are hurting consumer spending on entertainment.
Disney’s American theme parks had a modest decrease in the third quarter.
More trouble ahead for Disney
Disney predicted that two of its international theme parks would see a decline in income.
“While we are actively monitoring attendance and guest spending and aggressively managing our cost base, we expect Q4 Experiences segment operating income to decline by mid-single digits versus the prior year, reflecting these underlying dynamics as well as impacts at Disneyland Paris from a reduction in normal consumer travel due to the Olympics, and some cyclical softening in China,” Disney stated.
Disney CFO Hugh Johnston noted the company domestically was experiencing the “lower-income consumer is feeling a little bit of stress” and “high-income consumer is traveling internationally a bit more.”
“I think you’re just going to see more of a continuation of those trends in terms of the top line, and then the bottom line will be reflective of the fact that we’ve got some one-time costs coming in and going out both this year and last year,” Johnston said about the theme parks. “I do expect to see international strengthen.”
Disney CEO Bob Iger has major obstacles to overcome to get the company back on track.
Its streaming business turned a small profit for the first time after losing the company billions.
But the streaming market is saturated with competitors which makes growth challenging.
CFRA Research analyst Kenneth Leon warned that ABC and the ESPN family of networks have troubled futures.
“Cable pay TV, including ESPN and the ABC network, is a legacy unit that is losing advertising revenue and pay TV subscribers. Sports rights and the hefty offer to air the NBA should be called out on the earnings call,” Leon wrote.
Disney saw some bounce back in its movie business with the non-woke animated film Inside Out 2 but it remains to be seen if the company learns its lesson from the movie’s success.
But the Star Wars streaming series The Acolyte flopped after its showrunner bragged it was the “gayest” offering in the franchise’s history.
The company has a long road to go if it ever hopes to return to its glory days.
DeSantis Daily will keep you up-to-date on any developments to this ongoing story.
