09 February 2023
If you are covering Disney’s latest financial results, please find below a comment from Ben Barringer, equity research analyst at Quilter Cheviot:
“Disney, and Bob Iger specifically, produced a strong rebuttal to the criticisms the business has received from activist investors in its latest financial results. While the Parks business continues to rebound from the pandemic well and Disney+ continues on its growth trajectory, Iger was keen to stress the big changes and franchises he has introduced in his time in charge, and how these will be key for the business going forward. As part of this, and along with all the other big tech names on Wall Street, Disney is going on a cost-cutting campaign in order to rationalise the business and set it up for the next phase of growth.
“Part of this is revolving the business around digital and entertainment, as well as the traditional Parks business. ESPN remains part of the strategy for now, but it remains to be seen if it has a long-term future within Disney. Along with the job cuts and cost cutting, Disney is also going to stop providing guidance on its subscription numbers – a move Netflix made last year. The lack of clarity is disappointing but it should still see good growth as content becomes more creative and better marketed.
“Ultimately, Disney continues to want to be a digital business, and as such Disney+ and the content it produces is going to be crucial for the company going forward. It is in the midst of a huge digital transformation and with linear TV continuing to struggle, it is hoping its streaming service can hit profitability quickly and continue to grow. With strong management at the top, we can see that strategy paying off.”
