One Year After Bob Chapek’s Firing, Disney Reports Its Iger Era Earnings
The Walt Disney Company just concluded one of its most tumultuous years ever with the reporting of its earnings for Fiscal Year 2023.
When the fiscal year started in October 2022, Bob Chapek was still in charge. Less than two months later, Bob Iger had replaced him.
The sudden change at the top of Disney’s corporate food chain represented the most chaotic time for the company since the Michael Eisner/Roy Disney feud.
Still, the Disney machine somehow weathered the storm. During its most recent fiscal year, Disney earned the most money ever in its 100-year history.
We just learned how much, and it’s impressive. Let’s talk about all the money Disney made during its centennial year.
About the Earnings Report
Let’s start with a quick reminder about how far or how little we’ve come this year.
Roughly a year ago, Bob Chapek held an eerily understated fiscal earnings call during an election day and a hurricane.
Chapek blithely stated Disney’s numbers, glossing over huge losses in the Direct-to-Consumer division.
CNBC talking head Jim Cramer turned apoplectic, calling for Chapek’s firing.
We later learned that Disney CFO Christine McCarthy had exchanged texts with Cramer that day.
McCarthy would later earn (some possibly undeserved) credit for Chapek’s firing.
The former CEO lost confidence on Wall Street by projecting Disney’s Fiscal 2023 growth in the single digits.
In other words, he expected Disney to earn about $85-$90 billion in Fiscal 2023.
Well, after everything that transpired at the end of last year and in early 2023, Disney just reported earnings.
The company’s revenue for Fiscal 2023 was $88.898 billion. So, yeah. All the machinations led to the same general outcome.
Always remember that it’s the journey, not the destination.
Yeah, I don’t know how to take this one seriously, as it’s merely the latest indicator that much of what happens on Wall Street is fluff.
Currently, Disney faces a potential activist investor squabble with billionaire Nelson Peltz, whom CNBC reports is waiting for today’s report before taking action.
What should Peltz think of today’s announcement? While there’s probably not much Disney could do to dissuade him, let’s take a deep dive into the numbers.
Disney Makes Money
During its after-hours report on Wednesday, Disney announced two sets of details.
The company revealed Fiscal Fourth Quarter 2024 results and Fiscal 2024 overall performance.
Wall Street will focus on the latter number since it shows the overall state of the company and is easy to compare year-over-year.
To wit, in 2019, Disney as a company earned $69.57 billion before the pandemic began.
By the end of 2021, Disney had nearly returned to its prior levels with $67.418 billion.
Last year, Chapek’s Disney managed $82.72 billion. Yes, folks. Bob Chapek led Disney to its most successful revenue year ever.
You never would have guessed that, would you?
I mean, he did care more about money than people. So, it does make sense to a degree. Still, Chapek wrecked the place on his way out the door.
Now, Bob Iger and his new team must pick up the pieces. One of them, CFO Hugh Johnston, literally just got there this week.
The new CFO will quickly discover that Disney probably won’t do much better in terms of Fiscal 2024 earnings, either.
That’s because the SAG-AFTRA strike lingers. With Disney and Warner Bros. Discovery reporting revenue today, they’d tried to make a last-minute deal.
Disney’s 2024 film and television slates will suffer due to this strike, and it impacted today’s report as well. But I’m getting ahead of myself.
Let’s start with the basics. Wall Street had projected earnings per share of $0.68 and revenue of $21.32 billion.
Disney’s actual totals beat expectations, with reported earnings per share of $0.82 and $21.241 billion for the quarter.
Disney’s New Divisions
Last month, Disney changed the way that it reports earnings in some of its divisions.
So, we can’t really do apples-to-apples comparisons this time.
Disney separated ESPN from the rest of its media as it negotiates with potential investment partners.
Still, we know that Wall Street cares about some numbers more than the rest.
Specifically, Disney needed to show improvement in Direct-to-Consumer (DTC).
Last year, this division lost $1.474 billion against revenue of $4.907 billion.
One of Iger’s primary assignments in the aftermath of his return has been narrowing the losses in this division, with Disney aspiring for profitability in Fiscal 2024.
For this quarter, DTC earned $5.036 billion, with a loss of $420 million. That contrasts with $5.525 billion and $512 million in losses last quarter.
Disney is apparently heading in the right direction, which it should be. Remember that the company laid off thousands of employees earlier this year.
The purpose of those layoffs was to add a layer of cost control to the business, given that its profits had shrunk in recent years.
Yes, the pandemic played a vital factor there, but Wall Street is long past excuses at this point.
Still, the divisions that earn the most money matter more to Disney’s bottom line.
Linear Networks remains in decline. For the quarter, Disney reported income of $2.628 billion. As a reminder, Disney spllits ESPN now.
So, there’s not a direct year-to-year comparison here. However, ESPN earned $3.910 billion.
Meanwhile, our favorite, the Parks, Experiences and Products division continues to dominate.
Despite reports of lower crowds at certain times, the overall Parks division earned a whopping $8.16 billion. That’s an increase of right at ten percent from last year’s $7.425 billion.
Operating income went from $1.514 billion in the final quarter of 2022 to $1.759 billion this quarter.
Final Thoughts
Disney CEO Bob Iger has taken the unusual step of speaking at CNBC with the announcement of today’s earnings report. Think of it as a victory lap for a good earnings report.
So, I’ll save a deeper dive of Disney’s Fiscal 2023 financials for a later date.
The TL:DR here is that Disney entered a transitional phase last year with the Chapek-for-Iger trade.
Due to the writer’s strike and impending business moves, Disney will remain in transition for Fiscal 2024 as well.
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