Disney’s Stock Plummets Following Its Latest Earnings Call

in Disney

Bob Iger Looking Serious

Credit: Qilai Shen/Bloomberg

The Walt Disney Company reported its earnings for the second quarter of fiscal 2023 on May 10. This was Disney’s first full quarter with CEO Bob Iger back at the helm. During the latest fiscal quarter, the company reported that sales for the quarter grew by 13%, and diluted earnings per share (EPS) from continuing operations increased to $0.69 from $0.26 in the prior-year quarter 1. Throughout this piece, we highlight some of the critical items that Disney fans and investors were focused on.

Bob Iger
Credit: Drew Angerer/Getty Images

Related: What Should You Look For When Disney Reports Earnings Next Week?

Disney’s enormous footprint includes a global portfolio of Theme Parks, Resorts, Cruise Ships, movies, streaming platforms, and traditional linear cable broadcast stations, including Disney+, Hulu, ESPN+, ESPN, and ABC. Attendance at Disney Parks drove revenue this quarter. Disney’s Parks, Experiences, and Products division increased its profits by 20% to $2.2 billion.

Unfortunately for The Walt Disney Company and CEO Bob Iger, the profits were not evenly distributed across Disney’s various businesses. This ultimately led to a reaction from investors on Wall Street, which saw the stock drop as much as 10% following the earnings release on Wednesday, May 10. Disney+ lost nearly four million paid subscribers this quarter, dropping to 157.8 million. ESPN+ increased slightly to 25.3 million subscribers, and Hulu remained steady at 48.2 million. Stakeholders of The Walt Disney Company are worried that the growth trajectory of Disney+ could be at a standstill.

Despite the negative news on its streaming figures, The Walt Disney Company saw excellent profits within Disney’s Parks, Experiences, and Products division. The bright spot for the company was that Disney did report that Disney Park Guests spent more time and money during the quarter visiting its parks, hotels, and cruises and on digital additive products like Genie+ and Lightning Lane.

Two little girls walk toward the disney castle, being photographed by a woman in mickey ears. All carry balloons.
Credit: WDW News

Related: First Ever ‘Frozen’ Roller Coaster Revealed for THIS Disneyland Park

What We Learned Last Quarter About The Disney Parks?

Disney’s 2nd quarter earnings revealed that the Parks alone brought in $7.7 billion, with the main three parks showing a 23% increase being:

  • Shanghai Disney Resort
  • Disneyland Paris
  • Hong Kong Disneyland

Disney World was not even close to producing those kinds of numbers. Walt Disney World reigned supreme over the other Disney Parks for the longest time, but the data unveiled in this week’s earnings call tells us a different story.

Disney Finally Admits They’ve Been Ignoring Guests

Related: Bob Iger Says Disney Theme Park Expansions Are Incoming

During the earnings call with Walt Disney Management, CEO Bob Iger did mention in his remarks that the company announced the potential for more Parks shortly. During Iger’s call with analysts, he said something significant that Disney Park fans might have missed.

According to Iger, he would tell Wall Street analysts that the company plans to excavate more Park plans to bring expansions to the right Parks around the globe. Iger said he is “closely evaluating” a “number” of “potential” opportunities to grow and expand the Disney Parks worldwide. But he assures investors that he will only put forth these growth opportunities and expansions “where it makes” the most sense to direct future investments.”

These statements are vague, but hearing Iger talk about future expansions is very interesting.

A couple rides TRON Lightcycle/Run
Credit: @jump2parkspeed on Instagram

Related: Five Things We Learned From Bob Iger’s First Quarterly Earnings Call as Newly-Returned Disney CEO

At last year’s Disney D23 Expo, Disney teased several exciting projects, including franchises and brands like Marvel and Avatar. Josh D’Amaro, Chairperson of Walt Disney Parks and Resorts, informed audience members that Disney was toying with completely overhauling DinoLand U.S.A. at Walt Disney World’s Animal Kingdom. This land allows Guests to take a trip back in time and learn about prehistoric life.

The concept art of the overhaul showed an entirely new land featuring Moana and Zootpia-themed experiences, rides, and attractions. We would be unfortunate to see this opening-day land go extinct, especially when considering this overhaul may mean the permanent closure of DINOSAUR, one of Disney’s scariest and most adrenaline-pumping attractions.

However, as a Disney Parks fan, you must be prepared to say goodbye for them to grow, change and evolve.

Mickey Mouse as Conductor on the Walt Disney Railroad
Credit: Disney

Related: Iger Exposes DeSantis’ Lies About Disney in Earnings Call

Disney Confirms It Is Gutting Disney+ and Removing Content

Along with the Disney Parks, one of the main topics discussed was the strategy for streaming moving forward.

On the call, Disney’s CEO Bob Iger said it would be gutting Disney+ in a strategy to curb costs and invest in promising projects. This may mean the end for many fan-favorite TV shows, but no one knows what Disney+ content will be removed from the platform.

The streaming platform’s huge loss was partially down to the streamer’s Disney+ Hotstar offering in India and Southeast Asia losing the Indian Premier League (IPL) rights for the massive cricket nation. However, losses were also reported across North America and other territories. On his first Earnings Call after returning as CEO earlier this year, Iger said that one of his main focuses would be increasing subscriptions and gaining a more significant market share in the crowded streaming arena.

disney-plus-losing-subscribers

Related: Disney CEO Thanks’ Super Mario’ Movie For Saving Industry

Content curation has seemingly been the top priority for Disney, and McCarthy outlined the company’s plan, saying, “We are in the process of reviewing the content on our DTC services to align with the strategic changes in our approach to content curation.”

The comments come as Disney recently canceled projects like National Treasure and Lucasfilm’s Willow after just one season each.

“As a result, we will be removing certain content from our streaming platforms and currently expect to take an impairment charge of approximately $1.5 to $1.8 billion,” McCarthy said. “The charge, which will not be recorded in our segment results, will primarily be recognized in the third quarter as we complete our review and remove the content.”

The CFO added that “going forward, [Disney] intends [s] to produce lower volumes of content in alignment with this strategic shift.”

Bob Iger with the hulu and disney plus logos tied to gether with wedding rings
Credit: Inside the Magic/Disney

Related: Disney+ and Hulu Will Be Combined On One App by the End of the Year

This could mean tough losses for studios like Lucasfilm and Marvel Studios. Disney’s most significant new content output is Kathleen Kennedy and Kevin Feige’s, and not long ago, the latter commented that the superhero studio is pulling back on content. This is no clearer than the slate this year, where, as of May 2023, only one television show — Secret Invasion — has a confirmed release date.

At one point, What If…? Season 2, Loki Season 2, Secret InvasionIronheartEcho, and Agatha: Coven of Chaos were all rumored to release this year. That is no longer the case. And what is also interesting is that a report from 2021 stated that Marvel shows were a big hit with current users but did little to attract more subscribers. It seems nothing has changed.

Bob Iger echoed McCarthy’s sentiments on the fledgling streaming service, saying that Disney will be more “surgical” in its programming for Disney+.

“When you make a lot of content, everything needs to be marketed,” Iger said on the Earnings Call. “You’re spending a lot of money marketing things that will not impact the bottom line, except negatively due to the marketing costs.”

All three logos for hulu, Disney+, and ESPN+
Credit: Disney

Related: Bob Iger Sends Cold Mass E-Mail Regarding Disney Layoffs

The recently reinstated CEO brought listeners’ attention to the current, seemingly more profitable theatrical slate. Iger said that with movies like Avatar: The Way of Water (2022), the soon-to-be-released live-action remake of The Little Mermaid (2023), Guardians of the Galaxy Vol. 3 (2023), and the upcoming Disney Pixar movie, Elemental (2023), that marketing dollars can be used to get more subscriptions due to their popularity. This would be instead of throwing marketing dollars at projects that do not positively impact the bottom line.

Iger called this ongoing learning a “maturation” process. Streaming is such a new component of the business model, and it isn’t unusual for these peaks and troughs to happen in the first few years of a new product, especially something as massive as The Walt Disney Company’s streamer.

DeSantis Vs. Disney, The War Of Words Continue

During The Walt Disney Company’s quarterly earnings call, Iger was asked about his concerns regarding Walt Disney World Resort’s future in Central Florida. “I’ve got a few things I want to say about that,” he began.

Iger argued that the lawsuit filed against DeSantis by The Walt Disney Company made its position very clear, though he didn’t comment on DeSantis’s countersuit.

“This is about one thing and one thing only,” Iger said. “That’s retaliating against us for taking a position about pending legislation. And we believe that in taking that position, we were merely exercising our right to free speech.”

Governor DeSantis VS. Disney World. May Place Lien, Ending Walt Disney World Resort
Credit: Inside the Magic

Related: Disney CEO Threatens DeSantis With Pulling Disney World Investments, Tax Dollars Out of Florida

Iger would say, “This is not about special privileges or a level playing field or Disney, in any way, using its leverage around the state of Florida,” he continued. Iger argued that the thousands of other special districts given to businesses and organizations around Florida, like the Daytona Speedway and The Villages retirement community, would be undergoing the same level of government oversight if DeSantis was uniformly applying the law.

“There’s also a false narrative that we’ve been fighting to protect tax breaks as part of this,” Iger said. “But in fact, we’re the largest taxpayer in Central Florida, paying over $1.1 billion in state and local taxes last year alone. Due to that special district, we pay more taxes, specifically more real estate taxes.”

Iger reiterated The Walt Disney Company’s plan to invest $17 billion in Florida over the next five years and touted that it pays 75,000 Disney Cast Members well over state minimum wage.

Governor DeSantis looking at Disney World Castle; The end of Disney in Florida?
Credit: Inside the Magic

Related: Iger Exposes DeSantis’ Lies About Disney in Earnings Call

“We’re proud of the tourism industry that we created, and we want to continue delivering the best possible experience for Guests going forward,” he said. “We never wanted and certainly never expected to be in the position of defending our business interests in federal court, particularly having such a terrific relationship with the state as we’ve had for more than 50 years.”

He finished with a straightforward question for Gov. DeSantis: “Does the state (Florida) want us to invest more, employ more people, and pay more taxes or not?”

What did you think of the earnings call with Disney shareholders, and what did you find most interesting? Let us know by leaving us a comment below.

in Disney

View Comments (3)