Six takeaways from Disney's quarterly earnings call
It's not all magic in the kingdom of Disney.
Overall revenue grew 4% but, like most media corporations, The Walt Disney Company is navigating the ebbs and flows of consumer behavior, cord-cutting and a sluggish ad market, among other issues.
In today's quarterly earnings report, CEO Bob Iger said he was still optimistic about the company's future. He identified three areas that he believes will drive future growth: movies, parks/cruises, streaming/direct-to-consumer.
Here are six takeaways from today's earnings call.
1. Movies: Disney did not have the hits this summer. Iger said the performance of its recent releases were "disappointing and we don't take that lightly." Still, he points to Disney's "tremendous run over the last decade" with such blockbusters as Avatar and Frozen. Disney has always known how to exploit its robust intellectual property with TV spinoffs, character-driven merchandise, movie-themed rides in its parks and the like.
2. Parks/resorts/cruises: Overall revenues for Disney's theme parks and cruises increased 13% to $8.3 billion. Attendance at Walt Disney World in Florida was down but that was offset by increased attendance at its theme parks in Shanghai and Hong Kong. Iger said "booked occupancy" for upcoming Disney cruises is at 98%.
3. Streaming: revenues for Disney's direct-to-consumer offerings like Disney+, ESPN+ and Hulu, increased 9% to $5.5 billion. Driving revenue wasn't necessarily subscription growth but rather increased prices. Disney has increased the price of a Disney+ subscription before and it plans to do so again. Iger said the last time they raised prices, they didn't see "significant churn or loss of subs which was heartening."
4. Cord-cutting impact is "unmistakable": Iger rattled nerves recently when he suggested that Disney's linear networks, including ABC, FX and National Geographic, might not be essential to its "core" business (implying he may someday jettison them). Today's earnings report were partly affirmation of that. Revenues for linear networks decreased 7% to $6.7 billion, and operating income decreased 23% to $1.9 billion.
5. ESPN BET: Described as a "branded sportsbook for fans," ESPN will partner with PENN Entertainment in a $2 billion deal to offer consumers, "the ability to place bets with less friction from within our products," said ESPN Chairman Jimmy Pitaro in a statement.
Gambling isn't exactly on-brand for family-friendly Disney. Rick Munarriz, a senior media analyst with The Motley Fool, jokes that, "it sort of just offloads the risk."
"You go on a Disney cruise ship, there's no casino," says Munarriz, "For a long time, you couldn't get an alcoholic drink" in the Magic Kingdom. "But there is money being generated from gambling on sports," he says.
6. Bob Iger's Mouse House: There's been talk that a tech giant like Apple might buy Disney. Iger pretty much dismissed the idea as pure speculation. "It's not something we obsess about," he said.
In November 2022, Iger came out of retirement to help put the Mouse House back together again after some reported missteps by former CEO Bob Chapek. Iger was supposed to stay for two years. But Disney's board recently voted unanimously to extend his contract through Dec. 31, 2026.
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