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Wednesday, September 9, 2020

Disneynomics: Pandemic Accelerating New Thinking at Disney

by Ray Keating
Disneynomics Column
September 9, 2020

Christine McCarthy, The Walt Disney Company’s chief financial officer and senior vice president, was interviewed today for the Citi 2020 Global Technology Conference. McCarthy largely hammered home points about how the pandemic has driven an assortment of changes in the way Disney is thinking about a variety of its businesses.

Like other enterprises of all types and sizes, McCarthy made clear that the pandemic is pushing Disney to reassess how it operates, its cost structure, how many (not all) people can work differently, and its physical plant. She came back again and again to words like “nimble,” “flexible,” and “acceleration.” For Disney, the acceleration largely has to do with direct-to-consumer services, namely, streaming services Disney+, Hulu, ESPN+, and its international STAR efforts.

McCarthy, as CEO Bob Chapek has done, also reiterated that they “know” that original content is crucial for gaining and retaining streaming subscribers. She acknowledged the company still being “hamstrung” due to COVID-19 in terms of producing more new content – for streaming, for ABC, for the theater, and so on. McCarthy did note that things were back up and running for the next Avatar movie, for Marvel’s Shang-Chi and the Legend of the Ten Rings, and for some 20 series being produced in “bubbles.” 

Also mentioned was that Disney looks forward to getting things rolling once more on Marvel series WandaVisionLoki, and The Falcon and the Winter Soldier. Those three shows are very important for Disney+.

As for the Mulan $29.99 video-on-demand premiere on Disney+, McCarthy justified the extra expense for families, and would only say that Disney was “pleased” with the four-day weekend. Details will have to wait for the next Disney shareholder meeting.

As for looking a bit further down the road, the issue of the rights to the NFL came up. McCarthy made very clear that the NFL “is an extremely important partner” for Disney, but also that the company would be “disciplined” in accessing opportunities. As I’ve argued before, Disney would seem to be an ideal partner for the NFL and its NFL Ticket, given ESPN+ as well as ABC and the ESPN linear channel. Think about how many additional subscribers Disney would gain for its combo package of Disney+, Hulu and ESPN+ if the NFL Ticket were added. Watch out Netflix.

By the way, in terms of taking advantage of any opportunities that present themselves, McCarthy noted that Disney has over $20 billion in cash on its balance sheet. That’s a nice pile of cash with which one can be nimble and flexible, and can hit the accelerator in terms of opportunities and necessary changes in a new environment. 


Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels. He can be contacted at  raykeating@keatingreports.com.

Also, get the paperback or Kindle edition of Ray Keating’s new book Behind Enemy Lines: Conservative Communiques from Left-Wing New York.

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