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THRILL-finders They love rollercoasters; Investors, not so much. Disney’s stock price’s recent streak is akin to rides at its theme parks: a few moments of excitement, then, inexorably, comes the fall. In the year After 12 stellar months in 2020-21, the company’s market value nearly halved as Wall Street grew wary of Hollywood’s long-term prospects (see chart). Bob Iger, Disney’s on-again, off-again CEO, came out of retirement last year to put the kingdom back in order. On Feb. 8, it announced that revenues rose 8 percent year-on-year in the three months to December and that the number of subscribers to its streaming services remained above expectations, even after Disney+ raised its prices. But cheery financial data wasn’t the highlight of Wednesday’s call.
Instead, investors were glued to their seats to hear Mr. Iger’s plans for Disney’s future. The company has announced that 7,000 people, or 3.6 percent of its workforce, will be laid off as it embarks on a $5.5 billion cost-cutting drive. As part of the effort, the company is organized into three different divisions. Streaming will be integrated with movies and television under a new Disney entertainment division. Sports will be its own section, featuring ESPN and ESPN+. The lucrative parks business, which includes cruise ships and consumer products, accounts for a third.
The task ahead is huge. Disney has come under fire from activist investor Nelson Peltz, who is demanding a seat on the board and has complained about the company’s balance sheet. The foundations for growth are boring. Disney’s dependence on cable is unsustainable. Disney-owned ABC’s broadcast network has seen its audience drop by a third over the past four years. Cinema has not fully recovered from Covid-19, and may never do so. Disney’s streaming empire, including Hulu and ESPN+, has grown rapidly, but at a high cost. The division lost $1 billion last quarter as it struggles to compete with the likes of Apple TV and Amazon Prime Video. Tech giants don’t need to make money from streaming, which they see as a supplement to their core business. Hollywood studios are struggling to compete on this.
Disney, which is celebrating its centennial this year, still has a long way to go. Her top four films will lead the box office in 2022. Its theme parks remain a bright spot on its income sheet. Another successful era for the company is not over. Investors hope Mr Iger’s revamp will bring a touch of magic to the old brand. ■
Read more of our coverage on Disney and the streaming industry:
As Disney turns 100, the business is on a rollercoaster ride.
Disney’s problems show how technology has changed the business of culture
Disney brings back the star of the past. The real problem, however, is the script.
What Disney can learn from Elton John.
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