Disney missed Wall Street's expectations, reporting weaker-than-expected revenue for the past quarter. But investors didn't appear terribly rattled, as Bob Iger reassured them that the company was "aggressively managing" its cost base. (That's typically corporate-speak for layoffs, though Disney insisted it was not planning more job cuts after axing thousands over the past year.)
"Our results this quarter reflect the significant progress we've made over the past year," Iger said in a statement. "While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our business again."
Disney is now planning to slash an extra $2 billion from its sprawling global operation. That's on top of the previously announced $5.5 billion cost saving plan, which included 7,000 job cuts.
Disney's stock was up 2% in late trading, bouncing off a nearly 10-year low.
Why it matters
Disney, like most legacy media titans, has been low on magic lately, as my colleague Samantha Delouya writes.
Over the past century, almost no other company has had a bigger impact on popular culture than Disney.
But the House of Mouse is hardly immune to the unrelenting headwinds facing the media industry in this era. Its streaming business remains unprofitable; strikes are taking a toll; attendance at Disney World Resort in Florida is flagging; the company remains locked legal battles with Gov. Ron DeSantis; and, not least, there is no clear succession plan to replace the Almighty Iger.
Let's dig in...
Cord cutting
Revenue from Disney's linear TV assets — ABC, Disney Channel, FX, National Geographic, et al — has been slipping for years. ESPN remains a bright spot. In a recent note, Bank of America's Jessica Reif Ehrlich called ESPN "the glue enabling the cable bundle to maintain its profitability."
But viewership is down as cord cutting grows. That's why Ehrlich also said ESPN should accelerate its transition to streaming as fewer people pay for traditional TV and sports licensing costs continue to go up.
Streaming scrum
On Wednesday, the company said it added 7 million Disney+ subscribers and narrowed its streaming losses.
But the business continues to burn through cash, and analysts are watching closely to see whether Disney's latest price increase for Disney+ spurs cancellations.
Content angst
Changing consumer tastes may also pose a risk to Disney's financial health.
Several of Disney's high-profile movie bets were a bust at the box office this year, including "Indiana Jones and the Dial of Destiny" and "Ant-Man and the Wasp: Quantumania."
Meanwhile, all Hollywood productions have largely been shut down for more than six months after writers went on strike from May till September, and an actors' strike is still going.
Park power
The parks department is a reliable revenue driver for Disney, and the most recent quarter was no exception.
Disney's theme park division brought in 30% more revenue in the quarter compared with last year. The company pointed to strength in its international theme parks and Disney cruises. But revenues for Walt Disney World in Central Florida were weaker.
In September, Disney announced it would lean more heavily into its theme park business, doubling capital expenditures over the next 10 years to roughly $60 billion. The company plans to use that money to expand its parks and cruise line capacity.
The next Iger?
Iger commands a cult-like devotion within Disney. Heck, it's part of the reason they clawed him back from retirement to right the ship. But he can't stay there forever, and so far there's been no indication that a successor is on deck.
Iger has promised that in his second act as CEO, he is "intensely focused" on finding someone to take his place when his contract expires at the end of 2026. Of course, he said that he'd remain in the job (again) only for two years, and that quickly got extended to four.
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