Disney Execs Dumber Than A Worm

Even a worm can learn to avoid pain. Not so for Disney:

• "Final Numbers Are In: Disney Lost over $120 Billion in 2022"--Disney Fanatic (Jan. 1, 2023). 

    Reports show that The Walt Disney Company lost $123 billion in market value in just the past year as its stock price closed the year down 44%. Down Jones Market Research shows 2022 to be The Mouse House’s worst year in its history since 1974, when the stock dropped a whopping 54%.

    Disney’s stock performance made it the second-worst-performing company among the 30 companies that make up the Dow Jones Industrial Average. And these results manifest despite surface-level success stories like achieving the highest quarterly revenue for Disney Parks Experience and Products ever, becoming the first studio to cross the $4 billion box office number, including Avatar: The Way of Water hitting $1 billion globally in less than two weeks.

    The fact of the matter is that Disney’s 2022 was plagued with bad news from its spat with Florida’s State Government, led by Florida Gov. Ron DeSantis, over legislation that has resulted in the loss of the Reedy Creek Improvement District to the discovery of unprecedented spending on the streaming side of the business that offset the Parks revenue and was paired with the news that Disney+ would not become profitable for at least another two years. Political bouts among fans over Disney’s “woke” policies were noticeably sprinkled throughout the year–even to be named “worst of the woke” for the second year in a row–and the Park experience has been marred by unruly Guests and higher costs for what the consensus has claimed to be lower quality. After all of this, it seems that there is very little faith, trust, and pixie dust left in Disney’s investor base. But, hopefully, the return of Bob Iger to the CEO position will help turn things around, and 2023 can signal the beginning of a return to better days at Disney.

•  "Disney shares slip as streaming losses narrow but some subscribers leave"--Reuters (May 10, 2023).

    Walt Disney Co (DIS.N) reduced streaming losses by $400 million from the prior quarter but also shed subscribers, the company reported on Wednesday as quarterly earnings landed in line with Wall Street expectations.

    Shares of Disney fell 4.4% in after-hours trading.

    A price increase and reduced marketing expenses helped improve the performance of Disney's streaming unit from January through March. The division ended the quarter with an operating loss of $659 million, compared with $1.1 billion in the prior quarter.

• "Analyst Estimates That Disney Has Lost $900 Million on Last Eight Studio Releases"--World of Reel (June 26, 2023). 

    The films contributing to the losses include “Lightyear,” “Thor: Love and Thunder,” “Strange World,” “Black Panther: Wakanda Forever,” “Ant-Man and the Wasp: Quantumania,” “The Little Mermaid,” and “Elemental.”

    The eight films cost roughly $2.75 billion to produce but only brought in $1.86 billion. Okay, but what about marketing costs? You have to take that into account as well — it must be way more than $890 million in losses. 

 

    And take note that the latter report is before the awful performance of the latest Indiana Jones movie. In that regard, Yahoo Finance reports:

    Its $302 million global take has only matched roughly the reported costs of its production budget, which suffered from expensive reshoots after test screenings indicated audiences were less than thrilled with the initial ending.

    Marketing and promotion are expected to have added easily another $100 million to that bill and Disney still has to pay the theaters their share of the receipts. 

The share to theaters will be 50% of the cut, which means that Disney, itself, has actually only grossed about $150M for a film which cost approximately $400M to produce and market. (The actual situation is probably even worse as the general rule is that a movie must bring in 2.5 times it production and marketing costs to break even). My daughter and her husband went to dinner at an Appleby's recently and were offered free tickets to go see the latest movie (albeit at a theater in a different town). That is how desperate Disney and theaters are to have people go see the film--giving away tickets. 

    Disney's response to all of this is to announce a live-action version of Snow White & The Seven Dwarfs, but not using "people with restricted growth" for the dwarfs (because apparently such people don't need acting jobs) and casting a Latino actress as Snow White (who has so named because her skin was white as snow). Apparently, in Hollywood, snow must be brown.

The title of the meme is made up, but the photographs used are real. The characters shown above will apparently be replaced by CGI "magical creatures".

    It will only get worse from here because Disney must come up with billions to buy out Comcast's one-third share of Hulu. (The actual amount depends on an independent valuation of Hulu, but Disney's agreement with Comcast requires them to pay at least $9 billion). But, as the Yahoo article observes, Disney's "upcoming slate looks little better: November’s The Marvels has little positive buzz going for it, especially after a recent string of superhero movies failing to make a profit, including Warner Bros. Discovery’s The Flash." 

To drum up cash for Hulu, Iger is now exploring the potential sale of some of his linear networks—whether free-to-air or cable. The Disney CEO has said that the business model that has historically underpinned their distribution of content is 'definitely broken' thanks to direct-to-consumer streaming.