by Ray Keating
News/Analysis
DisneyBizJournal.com
February 7, 2023
The Walt Disney Company’s earnings report and call for the quarter that ended in December of last year comes tomorrow (February 8) in the midst of a flurry of activity by and targeted at the company.
Of course, this is the first earnings call in the Iger II-post-Chapek period. Although, the quarter being reported covered both Chapek and Iger in the CEO driver’s seat, and Iger will be providing some forward-looking guidance.
As for the flurry of activity, there’s Nelson Peltz vying for a seat on the Disney board. Peltz’s Trian Partners has accumulated about $1 billion worth of Disney stock. But Trian’s campaign to get Peltz or his son a seat is opposed by the current Disney board. While Peltz has some points, there seems to be little excitement about his board campaign other than from Peltz.
Iger has challenges even beyond contributing to the search for his own successor. In a February 2 letter to shareholders, the Disney Board noted, “The Board is overseeing important strategic changes that our CEO Bob Iger is executing, such as putting more decision-making into the creative teams, implementing a cost reduction plan, prioritizing streaming profitability and improving the guest experience in our parks.” Cuts and restructuring promise to be painful, with the hope, of course, that the company is better positioned going forward.
At the same time, Iger needs to deal with improving the experience of customers (or guests) at the parks, even as members of a key Walt Disney World union just overwhelmingly voted down a contract.
Oh yes, and there are those uncertainties about whether or not the U.S. will slip back into recession in 2023.
For good measure, Florida state legislators are just about to fulfill Governor Ron DeSantis’s attack on Disney by turning over control of the Reedy Creek Improvement District, an entity that basically has allowed Disney to self-govern the land upon which Disney World sits since 1967, to a board selected by the governor, with approval from the state senate. That inevitably will slow development down and raise costs for Disney, and depending upon who sits on the board, could create additional headaches for the company.
Also, on the streaming front, The New York Times has reported, “Analysts polled by FactSet estimate that Disney+ will have 163 million subscribers, a slight erosion from the previous quarter.” However, as widely noted, the top focus across the streaming industry now has become profitability, with the question being which streaming platforms are dealing with costs so as to provide shareholders and consumers benefits now and into the future, and which ones are miscalculating due to short-run worries.
And as for Disney’s movie business, it’s a mixed story. There’s good news, of course, including the box office results from Avatar: The Way of Water, along with the company receiving 23 Academy Award nominations. However, Pixar is now floundering, and the Marvel superhero franchise has been seeing real chinks in the armor. While I expect Guardians of the Galaxy Vol. 3, coming in May 2023, to be a hit, there are obvious questions about Ant-Man and the Wasp: Quantumania (February 17) and The Marvels (July 28).
Much is expected from CEO Bob Iger’s first earnings call since returning, and he will need to ace it. Stay tuned.
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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? Keating also is a Disney shareholder.
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