Disney Stock Closes At Lowest Price In Nearly 9 Years
Shares of The Walt Disney Company fell 3.9% on Thursday, closing at their lowest level in nearly nine years.
Despite the return of Bob Iger, decreased losses in streaming, and strong results from its Parks division, investors remain skeptical that Disney will be able to manage a media landscape that has grown less and less profitable for the studio.
Disney’s Dilemma
The Gordian knot for Disney is this — ad revenue in traditional linear television is rapidly decreasing. Meanwhile, at the same time, streaming has yet to prove it can be possible. This is an issue that is fundamentally affecting Disney’s ability to forecast its future.
So far, Iger has proposed a myriad of solutions to this fundamental dilemma. On the linear television side, Iger has spoken openly about the fact that stations such as ABC, Freeform, National Geographic, and FX may not be core to the company’s future. At the same time, Disney is laser-focused on bringing ESPN (a network that they do see as core to their strategy moving forward) into streaming. This will require a major change to how sports media operates.
On the streaming front, Disney has made a number of changes in the last year. The company has announced that it will introduce price hikes to Disney+ and Hulu, continue to try to funnel customers to the ad-based versions of these streaming services, crack down on password sharing, and remove content from both libraries in order to save some money.
The biggest change in streaming will occur when Disney rolls out its “one-app” experience that combines the libraries of Hulu and Disney+. The company has also talked about bringing in a strategic partner in India, which Disney+ Hotstar continues to bleed customers (and money) after losing live cricket rights.
All Eyes on Iger
In recent months, Disney and Iger have also made headlines after the Disney CEO said striking Hollywood writers and actors were “not realistic” in their demands.
It was a rare public relations mishap for a CEO who has always guarded his words closely.
In the end, however, it will not be ill-advised strike statements, or a public feud with Ron DeSantis, that determines the future of Disney’s stock, it will be how the company transitions to a new media landscape.
Based on recent results, Wall Street has remained unimpressed with Disney’s prospects. It is now up to Iger and the board to turn things around.
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