Disney Takes Another Beating

By Douglas A. McIntyre Published Nov 18, 11:46AM EST

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Disney Takes Another Beating — © Handout / Getty Images Entertainment via Getty Images

There is an old saying–” the beatings will continue until morale improves.” Morale at The Walt Disney Co. (NYSE: DIS) must be extraordinarily high. In addition to institutional investors who have bought Disney shares and want to command its future, bad press about its studios has added to the woes of its CEO, Bob Iger, who returned last year to rescue the company he had built for over a decade.

CNBC ran a front-page article that points out that Disney’s movie studio is struggling. During Iger’s first run as CEO, the revenue and profits of this division were the foundation of Disney’s success. The studio also provided content for the launch of Disney+ in 2019. The entertainment company did not have to license expensive content from other companies to compete with industry giants Netflix and Amazon. The cable financial news network reported, “Disney CEO Bob Iger acknowledged last week that Disney’s films since the end of the pandemic haven’t met his quality standards.”

Disney had the highest market share among studios for several years based on gross ticket sales. Without this advantage, Disney has to fall back on its theme park, legacy media, and streaming businesses. Except for theme parks, other divisions have also posted weak numbers. All in all, this has dragged Diensy’s total earnings down.

The trouble with the non-studio Disney divisions is that its legacy media faces a drop in advertising revenue and a fall-off in what cable systems are willing to pay to carry ESPN. ABC, which relies mostly on advertising revenue, will not recover from the almost yearly drop in advertising for non-search and non-social media properties.

Streaming has done well regarding subscriber count, reaching 160 million for Dinsey+. However, this came at a cost. Disney+ was priced at $6.99 monthly, well below the price of the other major streaming services. Losses for Disney’s streaming business rose into the billions of dollars.

Disney faces challenges from two corporate raiders. The first is a decades-long leader in the sector–Nelson Peltz. The other is relatively newcomer ValueAct. They will press to improve the value of Disney’s shares, down 40% over the last two years. Whether their request will be for an asset sale or a change in management is too early to tell.

What is not too early to tell is that Iger needs his studio business to do well. And it isn’t.

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.