10 August 2023
If you are covering Disney’s latest financial results, please find below a comment from Ben Barringer, equity research analyst at Quilter Cheviot:
“While Disney has met expectation with its numbers, it is a business that is facing a lot uncertainty. CEO Bob Iger has some big decisions to make to turn the business around as it is impacted by a number of factors.
“Traditional TV continues to struggle, with revenues down 7% and profits down 23%. This has been partially offset by growth in Disney+ but is a long-term trend the business is struggling to reverse.
“Disney+ itself is now going through the growing pains stage and is taking a leaf out of Netflix’s playbook to put itself on a path to profitability. As a result, it is increasing prices, potentially exiting markets, reducing content and limiting password sharing. Disney, however, will be impacted more than most by the writers and actors strikes, so it will need to tread the line carefully.
“The parks business is another area of concern, where tourism is beginning to soften as inflationary pressures take their toll. While it was up 13%, we expect this to begin to moderate over the near-term.
“The business also currently has an interim chief financial officer and a very uncertain strategy in India following the loss of the IPL. With it about to have to spend $9bn on the remaining stake in Hulu, these are all unhelpful distractions as the business looks to right itself.”
