What about Disney’s Dividend?

 by Ray Keating

Analysis

DisneyBizJournal.com

August 12, 2022

 

Earlier this week, the Walt Disney Company announced a strong earnings report. (See DisneyBizJournal’s report.) The market certainly liked it, as the stock price closed on Friday afternoon up 12 percent for the week.

If the company’s financial situation continues to improve, a question pops up: What about the Disney dividend?

 

Disney had paid a stock dividend for more than 40 years until it was suspended at the start of 2020. Before it was stopped, Disney was paying an $0.88 per share semi-annual dividend. According to The Motley Fool, Disney is one of only three stocks included in the Dow Jones Industrial Average that does not pay a dividend.

 

When the dividend ceased, the company offered the following statement: “The Walt Disney Company (NYSE: DIS) Board of Directors today announced that it will not declare a semi-annual cash dividend for the second half of fiscal 2020, in light of the ongoing impact of COVID-19 and the Company’s decision to prioritize investment in its direct-to-consumer initiatives.” 

 

Notice that the statement didn’t focus exclusively on the pandemic, but also noted investments being made in its streaming services. Also, as stated on Disney’s earnings call this week, the company expects to see its Disney+ losses peaking in the current fiscal year.

 

Disney is pointing to streaming being profitable by 2024, with at least one analyst looking for Disney streaming to break even that year. Either way, that would be a major boost to the company’s overall bottom line.

 

Last August, Disney CFO Christine McCarthy said, “We don’t anticipate declaring a dividend or repurchasing shares until we return to a more normalized operating environment.” She also has said, “Longer-term, we do anticipate that both dividends and share repurchases will remain a part of our capital allocation strategy.”

 

As for the operating environment, the pandemic’s effects obviously are diminishing. However, uncertainty swirls regarding recession and inflation.

 

As the recession comes to an end and inflation retreats, then 2024 might be the time to be looking for a return of some kind of Disney dividend.

 

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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? (Also, full disclosure: I own shares in Disney.)

 

Two great ways to order Cathedral: An Alliance of Saint Michael Novel, which is Ray’s sixteenth work of fiction, and the first in the Alliance of Saint Michael series. Signed paperbacks here and the Kindle edition here. 

 

Two great ways to order Ray Keating’s new nonfiction book – The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks here, and paperbacks, hardcovers and Kindle editions here.  

 

Get all of Ray Keating Pastor Stephen Grant thrillers and mysteries in paperback and for the Kindle at Amazon.com and signed books at www.RayKeatingOnline.com. 

 

Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.

Disneynomics: Pandemic Accelerating New Thinking at Disney

by Ray Keating

Disneynomics Column

DisneyBizJournal.com

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 WandaVision, Loki, 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. 

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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.