💸 Iger says the magic words

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Tonight: Disney will have to dig deep to restore some magic. Plus: There's a lot of money and property at stake in the Trump civil fraud case. Let's get into it.

By Allison Morrow

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Last updated November 8 at 6:59 PM ET

🏰 HOUSE OF MOUSE

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.

NUMBER OF THE DAY

$1.7 billion

Adam Neumann, the charismatic but chaotic former CEO of WeWork, may be glad he was forced out of the now-bankrupt company back in 2019.

Neumann left with a ginormous exit package, which included $200 million in cash and a $245 million stock award. According to Bloomberg, when WeWork went public in 2021, Neumann had a personal net worth of $2.3 billion, with about a third of that in WeWork shares.

But even after WeWork stock crashed 99% and the company filed for bankruptcy this week, Neumann is still a billionaire, with a $1.7 billion fortune, according the Bloomberg Billionaires Index.

💸 TRUMP INC

Even for those of us who read the news daily, it is overwhelming to try to keep track of the 91 felony charges (across four separate cases) against former president Donald Trump. CNN even built a tracker for it.

And those are just the criminal charges.

The headlines this week have been dominated by New York's civil fraud case against the former president, who testified in person this week (and turned the witness stand into a mini-campaign rally despite repeated admonishments from the judge — more on all of that here.)

Even though the New York case isn't criminal, it might be the one Trump cares most about, at least for now. That's because the civil case strikes at the core of Trump's identity — his New York real estate empire.

The stakes are high for Trump, who has denied all wrongdoing, and his family.

The potential impact on his business lies somewhere "between severe and seismic" said Will Thomas, assistant professor of business law at the University of Michigan's Ross School of Business.

What's at stake:

Attorney General Letitia James sued Trump for $250 million, accusing him and his adult children of fraudulently inflating Trump's net worth to obtain financial benefits, such as more favorable loans and insurance policy terms.
She is seeking to bar him from doing business in the state.
Judge Arthur Engoron has already found Trump liable for fraud, and at the end of the trial (probably next month) he alone will decide how much of a penalty Trump owes and whether any other punishment is appropriate.
Engoron has also called for a receiver to oversee the dissolution of the entities, which include buildings such as Trump Tower, 40 Wall Street and the Seven Springs family compound in Westchester County, New York.
Other business holdings listed in Engoron's order included Mar-a-Lago, Trump's Florida residence and resort; a golf course in Aberdeen, Scotland; and his US-based golf courses.

If Engoron's ruling proceeds, things could get quite "messy" for Trump, Thomas said.

Dissolution would typically mean that a receiver — usually a person appointed by the court or by the state — takes over the whole enterprise for a time, cleans house, then closes or sells the entity and directs the proceeds back to the original owner. The practical execution is complicated and "potentially quite costly," Thomas said.

Of course, unwinding Trump's real estate portfolio would likely take years, and is almost certain to be appealed.

However, if Trump were forced to sell, or if the market didn't improve and he lost his appeal, he could face "devastating" losses, according to Adam Leitman Bailey, a real estate attorney in New York.

"Real estate is a long-term business. If you're forced to sell a property in short order, you're going to lose money — that's just the name of the game," Thomas said. "It seems very likely that the solution that's going to have to be reached, at least for some of these enterprises, is to sell the asset in order to cover the costs of dissolution."

My colleagues Alicia Wallace and Nicole Goodkind have the full story.

WHAT ELSE IS GOING ON?

📱Mark Zuckerberg personally thwarted initiatives meant to improve the wellbeing of teens on Facebook and Instagram, at times overruling some of his most senior lieutenants, according to internal communications made public as part of a lawsuit against Meta.

👀 A US regulator said Citibank illegally discriminated against Armenian Americans for years by singling out their surnames on credit card applications.

🍴A tentative five-year labor deal has been reached between the Culinary union and Caesars Entertainment, likely averting a strike at nine casinos along the Las Vegas Strip.

🏦 Loretta Mester, the hawkish president of the Federal Reserve Bank of Cleveland, is set to retire next year, the latest in a series of leadership changes within the central bank.