Disney’s Trouble Gets Worse

By Douglas A. McIntyre Published Sep 5, 10:30AM EDT

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Cable company Charter Communications wants to pay less money than it has in the past for some Disney programs that run on its cable systems. That move runs the risk of cancellation by its subscribers. It is a game of chicken. In theory, Charter has its subscriber risk Disney will lose Charter payments without successful negotiation. And Charter’s decision to drop some of Disney’s content could go on for weeks or months. (These are America’s most hated companies.)
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Disney does not need another division that is in trouble. Its streaming business grew quickly. Subscribers for Disney+ topped 150 million after a November 2019 launch. As of the last reported quarter, that number is slipping. Disney+ was launched for $6.99, which was almost certainly too low to make a profit. Disney traded margins for growth. Its steaming business has lost billions of dollars. It has raised rates, but this could cause many subscribers to cancel. In other words, higher rates are no guarantee of better margins if cancellation rates are high.
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Disney+ also has an army of competitors. Netflix and Amazon Prime are at the top of that list. They have many more subscribers than Disney. Netflix is highly profitable. Both companies have been in the market much longer. Due to this competition, Disney’s streaming financials will not be guaranteed to improve.
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Whether Disney has other problems is a matter of debate. Anecdotally, attendance at its U.S. theme parks has been dropping, perhaps because of high prices. Whether price reductions by Disney help is too hard to tell.
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Certainly, its legacy businesses, like ABC, face the struggles that all businesses in the sector do.

Finally, strikes by actors and writers will partially cripple Disney’s movie studios. It is a final but terrific hit.

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.