by Ray Keating
News/Analysis
DisneyBizJournal.com
February 8, 2023
The Walt Disney Company’s earnings for the quarter ended December 31, 2022, ran ahead of market expectations. Revenues also came in ahead of what was expected.
CEO Bob Iger announced a company reorganization under three areas – entertainment, ESPN, and parks, experiences and products. He also emphasized cost reductions, with an announced target of $5.5 billion in savings, which will include cuts in marketing and a 7,000 reduction in the Disney workforce.
For good measure, Iger announced that he is asking the board to reinstate the Disney stock dividend by the end of this calendar year, though at a more “modest” level than where it was prior to the pandemic. Disney CFO Christine McCarthy noted that this dividend would be “a small fraction” of pre-pandemic level, with the intention that it would grow with earnings.
Also, Iger announced that an Avatar attraction will be coming to Disneyland, and animated sequels to Toy Story, Frozen and Zootopia are in the works.
Compared to the same quarter last year, Disney’s revenues were up by 8 percent, coming in at $23.5 billion.
The diluted earnings per share (EPS) came in at $0.70, versus $0.63 in the same quarter last year, while diluted EPS excluding certain items registered $0.99 versus $1.11 last year.
Disney+ subscribers declined from 164.3 million in the previous quarter to 161.8 million in the latest. The losses came in India and Southeast Asia, as Disney lost the streaming rights to India Premier League cricket. ESPN+ subscribers increased from 24.3 million to 24.9 million, and Hulu subs rise from 47.2 million to 48.0 million.
However, streaming losses narrowed for the company, and Iger emphasized cost reviews across streaming.
Disney CEO Bob Iger was quoted in the earnings statement: “After a solid first quarter, we are embarking on a significant transformation, one that will maximize the potential of our world-class creative teams and our unparalleled brands and franchises. We believe the work we are doing to reshape our company around creativity, while reducing expenses, will lead to sustained growth and profitability for our streaming business, better position us to weather future disruption and global economic challenges, and deliver value for our shareholders.”
Iger emphasized a return of authority to creative areas, which will include distribution and financial decisions.
As for the Disney parks, it was reported: “Disney Parks, Experiences and Products revenues for the quarter increased 21% to $8.7 billion and segment operating income increased 25% to $3.1 billion. Higher operating results for the quarter reflected increases at our domestic parks and experiences and, to a lesser extent, our international parks and resorts. Operating income growth at our domestic parks and experiences was due to higher volumes and increased guest spending, partially offset by cost inflation, higher operations support costs and increased costs for new guest offerings.” Iger called parks performance “outstanding.”
At the time of this writing, approximately an hour after the markets closed on Wednesday, Disney stock was up by better than six percent in after-hours trading.
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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.
The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?
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