Disney Parks & Resorts have experienced a decent improvement over the previous quarter, announcing a 13 percent jump in revenue to $8.3 billion
Q3 Disney Parks Revenue
Disney CEO Bob Iger expressed his thoughts on the performance in today’s earnings call:
Our results this quarter are reflective of what we’ve accomplished through the unprecedented transformation we’re undertaking at Disney to restructure the company, improve efficiencies, and restore creativity to the center of our business.
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.
While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we now have in place, and because of Disney’s core foundation of creative excellence and popular brands and franchises.
Segment operating income increased by 11 percent to $2.4 billion. Higher operating results for the quarter reflected increases at Disney’s international parks and resorts, which were partially offset by lower results at domestic operations and, to a lesser extent, the merchandise licensing business.
Higher operating results at international parks and resorts were due to growth at Shanghai Disney Resort and, to a lesser extent, Hong Kong Disneyland Resort. The increase at Shanghai Disney Resort was due to the park being open for all of the current quarter compared to 3 days in the prior-year quarter as a result of COVID-19 related closures.
Similarly increased results at Hong Kong Disneyland Resort were due to guest spending growth and higher volumes, partially offset by increased costs driven by inflation. Guest spending growth was primarily due to an increase in average ticket prices. Higher volumes were attributable to increases in attendance and occupied room nights. Results at Hong Kong Disneyland Resort reflected the park being open for 72 days in the current quarter, compared to 54 days in the prior-year quarter due to COVID-19 related closures.
The decrease in operating income at Disney’s domestic operations was due to lower results at the domestic parks and Disney Vacation Club, driven by lower unit sales, and were partially offset by an increase at Disney Cruise Line. Lower operating income at the domestic parks and resorts was attributable to a decrease at Walt Disney World Resort, while results at Disneyland Resort were up modestly compared to the prior-year quarter.
At Walt Disney World Resort, the decrease was primarily due to higher costs and lower volumes. The increase in costs was attributable to inflation and accelerated depreciation related to the planned permanent closure of Star Wars: Galactic Starcruiser. Lower volumes were due to decreases in occupied room nights and attendance.
At Disneyland Resort, higher attendance and increased guest spending were largely offset by higher costs driven by inflation. Guest spending growth was primarily due to an increase in average ticket prices.
Revenue growth at Disney Cruise Line was due to an increase in passenger cruise days, partially offset by higher costs associated with Disney’s ongoing fleet expansion and increased depreciation. The decrease in the merchandise licensing business was due to lower revenue from merchandise based on Star Wars, Toy Story, and Avengers.
At the time of publishing, Disney stock closed out the day at $87.49 per share, though has risen to $90 after hours. This is about $10 under the stock price increase from the last earnings call back in May.
There has certainly been tumult in the third quarter, with dramatic shifts and disappointing performances at the box office impacting Disney as a whole. CFO Christine McCarthy stepped down from her position while Iger’s public perception was damaged after calling demands from striking actors and writers “not realistic.” In today’s call, he stated that he was “personally committed” to bringing the strikes to an end.
While “Indiana Jones and the Dial of Destiny” and “Haunted Mansion” have not been financially stellar, other films such as “Elemental” have made a surprise comeback — while Iger has also discussed opportunities to “turbocharge” theme park growth.
Rumors continue to circulate that Apple might eventually acquire Disney, though Iger has denied this at various points while also admitting he is considering the sale of various media assets. In today’s call, Iger refused to speculate on this long-rumored sale.
In Florida, there’s an ongoing legal battle with Florida Governor Ron DeSantis over the governance of the area in which Walt Disney World is located, though Iger and the company are continuing to pursue the matter in court, with the CEO himself stating it is “not our goal to be engaged in a culture war.”
The Walt Disney Company in Q2 2023
Previously, The Walt Disney Company announced approximately $21.8 billion in revenue during the second quarter of 2023. Their adjusted earnings per share (EPS) was $0.93, a decrease from $1.08 in last year’s quarter. This was for the period of January 1 to April 1, 2023. Disney Parks reported $7.78 billion in revenue during quarter two and Disney+ lost 4 million subscribers (but the financial performance of streaming did improve, as Iger said).
Throughout the second quarter, and continuing until the end of May, Disney completed three major rounds of layoffs in an aim to cut coasts within their media operations.
CEO Bob Iger has extended his return as leader of the company through 2026 and brought back former colleagues Kevin Mayer and Tom Staggs to advise on television strategy moving forward. In a recent major upheaval of their TV properties, ESPN will now be launching a sportsbook with PENN Entertainment, officially becoming a major player in legal sports betting.
Here’s a selection of major stories from today’s earnings call compiled below:
- Direct-to-Consumer Losses Lessen, Overall Disney+ Subscriber Count Drops While Core Members Rise 1% in Third Quarter 2023
- Losses Shrink & Savings Target of $5.5 Billion Exceeded in $22.3 Billion Third Quarter 2023 for The Walt Disney Company
- International Disney Parks Shine While Galactic Starcruiser Closure & Lower Attendance Cause Domestic Destinations to Languish
- Disney CEO Bob Iger Refuses to Speculate on Sale of Entire Company
- Disney+ & Hulu Increasing Premium Plan Cost, New Ad-Free Bundle of Both Coming to the U.S. Soon
- Disney Announces Sale of Stake in DraftKings Just One Day After Revealing ‘ESPN BET’
- Disney CEO Bob Iger Says He’s ‘Personally Committed’ to Ending SAG-AFTRA & WGA Strikes