Disney Takes $20 Billion Nosedive to Lowest Level in 2.5 Years, Now Faces a Critical Decision

While all eyes were on the midterm elections yesterday, Walt Disney Co. reported some bad earnings news to shareholders.

Disney+’s quarterly losses more than doubled year over year, forcing executives to commit to cutting spending on the company’s streaming platform, according to The Wall Street Journal.

But it got even worse for the bright media giant.

Even though theme park revenue is up 36 percent – how could it not, after two years of COVID lockdowns, travel restrictions and mainstream media scaremongering – the “traditional media business” faced a quarterly decline that would undermine that growth .

Shares fell more than 12 percent Wednesday morning, making Disney the Dow Jones Industrial Average’s biggest loser for the day. According to The Journal, Disney posted its lowest stock closing price since March 2020.

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That stock price — about $87.78 as of Wednesday afternoon — meant the company had lost $20 billion in market value and faced some potentially difficult decisions.

“We believe Disney may be faced with a choice between its subscriber growth guidance and its streaming breakeven guidance, as we believe achieving both may be difficult,” Barclays analysts wrote, according to The Journal.

Still, CEO Bob Chapek told The Journal that Disney+ is expected to remain profitable in 2024 “assuming we don’t see a significant shift in the economic climate.”

Good luck with it.

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Wall Street had expected Disney+ to lose more than $1 billion this quarter — but not the nearly $1.5 billion it actually did. Chapek said losses are expected to narrow in the coming quarters.

There was some good news: Disney+ added 12.1 million net new accounts, meaning it added 12.1 million to its total, even counting subscribers who have dropped the service. Chapek said he expects to boost revenue through price increases and the addition of a new plan that would give subscribers the option to pay less upfront but would be forced to see ads in streamed content.

However, investors and analysts were less rosy about these forecasts.

For one thing, price increases mean less and less sales—that’s basic economics. On the other hand, Disney had previously set itself the goal of “reaching 215 million to 245 million streaming subscribers” by the end of 2024.

How to increase subscribers and prices at the same time? Good question that Disney doesn’t seem to have an answer to. Instead, as Barclays wrote, it may have to choose which goal it is trying to achieve.

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All of this is made even more problematic by elevated inflation, the threat of an imminent recession and a post-COVID environment that makes predicting consumer viewing habits more problematic than ever.

As people around the world return to normal — or at least to their offices — there will be fewer people who have the time to get their money’s worth from streaming services. The recession may put some of these people out of work, which may mean they have time to enjoy streaming services but not the money to afford them. And I haven’t even mentioned the plethora of competing services that seem to be popping up every day.

Chapek’s caveat, “provided we don’t see any meaningful change in the economic climate,” is almost ridiculous under the circumstances.

George Upper is the former Editor-in-Chief of The Western Journal and an occasional co-host of WJ Live, operated by The Western Journal. He currently works as an editor in the fields of faith, politics and culture. A former special operator, instructor and adviser to the US Army, he is a life member of the NRA and an active volunteer leader in his church. He was born in Foxborough, Massachusetts and has lived most of his life in central North Carolina.

George Upper, former Editor-in-Chief of The Western Journal, is now Contributing Editor on Faith, Politics and Culture. He is a former US Army special operator, instructor, manager and adviser. Born in Massachusetts, he graduated from Foxborough High School before joining the Army and spending most of the next three years at Fort Bragg. He holds bachelor’s and master’s degrees in English and a master’s degree in business administration, all from the University of North Carolina at Greensboro. He now resides in central North Carolina with his wife and a Maine Coon named Princess Leia, whose name he is not responsible for. He is active in his church’s education and security services and is a lifetime member of the NRA. In his spare time he films, reads a great deal by Lawrence Block and John D. MacDonald and watches Bruce Campbell films. He’s a fan of individual freedom, Tommy Bahama, fine G-2 pens and the Oxford comma.

Place of birth

Foxborough, Massachusetts

nationality

American

Honours/Awards

Beta Gamma Sigma

education

BA, English, UNCG; MA, English, UNCG; MBA, UNCG

location

North Carolina

Spoken languages

English

Topics of expertise

Faith, Economics, Leadership and Management, Military, Politics

https://www.westernjournal.com/disney-takes-20-billion-nosedive-lowest-level-2-5-years-now-faces-critical-decision/ Disney Takes $20 Billion Nosedive to Lowest Level in 2.5 Years, Now Faces a Critical Decision

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