11 May 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’s latest results paint a slightly lacklustre picture for the business, even with revenues up 13%. Given the macroeconomic backdrop and where interest rates are, the results in themselves are fine, but they leave you wanting more given the brand and pricing power Disney carries.
“Looking under the hood, it is clear why this is the case. Traditional TV is performing poorly and is cementing its place as a legacy business within Disney. Disney+, meanwhile, is going through somewhat of a transition, akin to a pivot from growth to profitability. Subscriber numbers are mixed, with drops in the US as price increases bite, but this isn’t a major concern given the content slate and the drive to rationalise marketing and distribution of that content. It is perhaps going through this transition faster than hoped but given the macroeconomic environment, investors care more about profitability right now.
“Finally, the parks business continues to grow well and take advantage of the post-Covid normalisation. With the Chinese economy reopening, we can see continued tailwinds in that regard, and if it wasn’t for this part of the business, the Group would frankly be quite stagnant.
“Finally, having seen off activist investor Nelson Peltz, Bob Iger has turned his attention to Ron DeSantis and the continued battle against Disney’s special status in Florida. He gives a robust defence of what the business has done for the Orange state, but can Iger appease DeSantis as he did with Peltz? This is a fight that is going nowhere while DeSantis battles for the US presidency.”
