7 months ago • 2 mins
What’s going on here?
Disney’s results, out on Wednesday, showed the media giant’s stepping – not leaping – toward its profit-improving targets.
What does this mean?
Let’s not beat around the bush: Disney’s streaming service lost four million subscribers last quarter – on the face of it, a serious bummer for investors. But the firm’s price hikes and newfound frugality meant the division’s losses ultimately shrank way more than expected. That, plus a regal performance from Disney’s theme parks – which scored a $1.7 billion profit, 50% above pre-pandemic levels – helped overall results inch in above expectations. Mind you, there was an important hiccup: revenue dropped 7% annually for the firm’s old-school TV business, with more and more folk ditching traditional television – and that “cord-cutting” could spell trouble.
Why should I care?
Zooming in: Knight in tarnished armor.
It’s not a surprise that cord-cutting has got Disney’s old stalwart, the traditional TV business, on the wane. But with streaming – the firm’s knight in shining armor – losing viewers too, Disney’s facing a real challenge. See, it’s not clear whether the firm’s current mishmash of a decaying old TV business and an unprofitable streaming service will ever hit the heights of Disney’s pre-streaming TV days. And that uncertainty’s got investors second-guessing whether the firm’s truly a clever long-term bet.
The bigger picture: Park life.
A trip to Disney’s parks costs a pretty penny these days – so with 7% more Mickey fans making the pilgrimage last quarter compared to the year before, you might wonder whether this whole impending-recession shtick is more fiction than fact. After all, splurge-worthy vacations can be decent indicators of the economy’s overall health – and on Disney’s evidence alone, everything seems fine and dandy. But cyclical businesses like theme parks can turn on a dime, so you’d be wise to keep an eye on future attendance stats for signs of any little cracks.
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