Disney’s in Trouble

By Douglas A. McIntyre Published Aug 7, 9:15AM EDT

Quick Read

Wall Street’s reaction to Walt Disney Co.’s (NYSE: DIS) mixed quarterly results was muted.
The numbers show that Disney is a mediocre company.

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Walt Disney Co. (NYSE: DIS | DIS Price Prediction) posted mixed quarterly earnings. The company bragged about the results, but its stock rose less than 1% on the news. Up only 3% this year, it has underperformed the S&P 500.

There are two primary reasons for the muted reaction. Its studio business results are choppy and rely on blockbusters. Its streaming business has better operating income, but the subscriber base is barely growing. That business operates in the shadow of Netflix and Amazon and always will.

To start, revenue rose a less-than-modest 2% to $23.2 billion. Income before taxes rose only 4% to $3.2 billion.

For some reason, Disney+ figures were compared to the previous quarter and were up only 1.8 million to 128 million.

Linear revenue fell 15% to $3.2 billion. Operating income from the division fell 28% to $697 million. The disappointment was enough to push Entertainment segment operating income down 15% to $1 billion. It was also enough to wipe out the effects of Direct to Consumer operating income of $346 million.

Experiences revenue rose 8% to $9.1 billion, and operating income was up 13% to $2.6 billion. The numbers shows how important theme park revenue is to Disney’s results. Investors still worry that an economic downturn will hurt these results.

Overall, the numbers suggest that Disney is a mediocre company. Media expert Tom Rogers described them to CNBC as tepid. Disney’s stock price shows that Wall Street agrees.

Disney Makes Big Changes to Streaming

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.