It’s that time again! Today, August 9th, 2023, at 4:30 PM, the Walt Disney Company held the Q3 earnings call. Kevin Lansbury (interim CFO) and Bob Iger were on the call to go over the report. Bob Iger opened the call with a speech regarding what he had accomplished in the past eight months, especially becoming more cost-effective. Here’s a look at what he said.
Bob Iger: “In the eight months since my return, these important changes are creating a more cost-effective, coordinated, and streamlined approach to our operations that has put us on track to exceed our initial goal of $5.5 billion in savings as well as improved our direct-to-consumer operating income by roughly $1 billion in just three quarters.
He pointed out that there is so much more to do and that he is very confident in Disney’s long-term trajectory because of their work. Iger also said that they are focused on improving the firm’s quality and reducing their cost. He then mentioned how Avatar: Way of Water is on track to be Disney’s biggest digital sale title in the company’s history.
After touching on Avatar, he moved the conversation to the parks. He said the parks will continue to be a key growth engine for the company. In that, he mentioned that Shanghai and Hong Kong had seen a stronger recovery than they expected. After listing the beautiful additions to other parks coming soon, he said that the strong dollar is expected to hurt Walt Disney’s World’s international visitation.
Iger then mentioned that Disney is seeing positive guest experience ratings at the parks. He also noted that there is a strong demand for Annual Passes. This led to him discussing how he sees a future where consumers can access more Disney content in one place.
Disney+ and Streaming Services
After Iger’s introduction speech, he dove into Disney+ and streaming. Disney has 3.3 million subscribers to their Disney+ ad-tier, and 40% of new subscribers signed up for the ad-tier. While he spoke about Disney+, we learned that the ad-free tier will cost $13.99 per month starting September 6th, 2023. They are also looking into password sharing and will address that in 2024. Disney expects to keep control of ESPN, even as they look at content and distribution partners.
Now let’s look at some other increases coming to streaming services. Ad-free Hulu will increase to $17.99 a month. The Disney+ and Hulu bundle will be launched at $19.99 a month. ESPN+ will also be increasing to $10.99 a month. Hulu with Live TV will increase from $69.99 to $76.99.
Bob Iger on Actor and Writer Strike
Iger: “Nothing is more important to this company that its relationship with the creative community. And that includes actors, writers, animators, directors and producers. I have deep respect and appreciation for all those who are vital to the extraordinary creative engine that drives this company and our industry. And it is my fervent hope that we quickly find solutions to the issues that have kept us apart these past few months. I’m personally committed to working to achieve this result.”
Galactic Starcruiser Updates
Disney says that the decision to close the Galactic Starcruiser resulted in a “$100 million accelerated depreciation charge.” This implies that they will write down $200 million by the time it closes at the end of September.
The Walt Disney Company Revenue $22.33 Billion + Spending
Revenue was $22.33 billion this quarter versus the $22.5 billion that was expected. Disney expects to spend $27 billion on content this year, partially due to the strikes. They also expect to spend $5 billion on capital projects which are lower than expected due to timing shifts, referencing projects that have been delayed. Something else mentioned was that Disney still expects to declare a modest dividend by the end of the calendar year.
It was also mentioned that Disney expects some continuing impacts at the domestic parks, mainly Walt Disney World, due to the 50th Anniversary being over. Other factors impacting the domestic parks are elevated travel costs and other macro-economic factors.
Visuals From the Earnings Report
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