Why I’m Confident in Disney in 2024
We interrupt your regularly scheduled doomscrolling to bring you this surprising announcement.
Things are looking up at The Walt Disney Company. Yes, I’m serious.
Here’s why I’m confident about Disney.
Outwit. Outplay. Outlast.
Here’s something you may not know about me. I was one of the first people on the internet to post television series recaps.
My wife and I recapped about 100 seasons of television, starting with Survivor’s second season. We also wrote about The Amazing Race and Top Chef.
At this moment, I only watch one of these shows, and I probably haven’t seen a new episode of Survivor in five years.
Most people are like me in that we get tired of something and eventually want to try something else.
That’s why so few pop culture elements survive the test of time. Realistically, how many can you name? It’s not like you’re still watching Gunsmoke, right?
At one point, everything from My Three Dads to Three’s Company to Third Rock from the Sun was popular.
The world keeps spinning, and society moves on. But some rare phenomena survive the test of time.
Walt Disney’s company is perhaps the best example in pop culture.
During the early 1920s, Disney captured America’s attention with a cartoon character.
No, not that one. It was Oswald the Lucky Rabbit, whom Disney lost due to a lack of rights ownership. So, he invented Mickey Mouse instead.
Then, Walt Disney would spend his career reinventing via films like Snow White and the Seven Dwarfs, Dumbo, and Snow White.
Later, Disney would conquer television via the Mickey Mouse Club and the Davy Crockett limited series.
After Walt Disney’s death, some believed the company would never recover. Then, the Disney Renaissance proved them not just wrong but loud wrong.
Over the past 15 years, Disney has purchased Marvel and Star Wars and elevated Pixar into a box office juggernaut.
Disney has recovered from much worse than what it currently faces.
The Right Leader at the Right Moment
I was recently reading a financial paper on Disney as an investment. I won’t bore you with the details, but one detail struck me as vital.
One of the surest signs of leadership occurs when a business admits its faults and attempts to learn from them.
Far too many corporate leaders take the David Zaslav approach and refuse to admit when they’ve failed mightily.
Contrast to Bob Iger during 2023. Say what you will about the CEO, he has demonstrated a willingness to listen to criticism.
When people express negative sentiments about him or the company, he is willing to look in the mirror and evaluate whether his detractors are right.
For example, Iger recently acknowledged that Disney has produced too many sequels lately.
Similarly, Iger once acknowledged that Disney should re-evaluate the Marvel Cinematic Universe and possibly emphasize new characters in lieu of sequels.
Then, Iger turned around and confirmed Frozen 4. A fifth Thor film is likely in the offing as well.
Similarly, Iger described Disney’s Linear Networks business, the backbone of its financial apparatus over the past quarter-century, as a no-growth business.
Iger hinted that Disney would sell these assets to interested outside parties.
Then, Disney’s leader dismissed this previous consideration by stating that the company will remain in the business of broadcast television.
Some would argue that Iger reneged on his earlier statements. Instead, I view this as a strong demonstration of leadership.
The CEO of Disney contemplated some of the most persistent criticisms and then adjusted accordingly.
When he disagreed with one of the ideas, Iger didn’t go along with the public sentiment. Instead, he did what he felt was best.
Wall Street and Hollywood are far too reactionary and short-sighted with their opinions. The leader of Disney must think in terms of decades.
We rarely think about the company in these terms, but Disney is a business, one that recently overcame an extinction-level event.
In March 2020, Disney lost almost all its revenue streams due to pandemic closures. I recognize none of us wants to talk about it now, but it’s true.
Disney’s financials before the pandemic were the envy of Wall Street and established the company as one of the best in the media industry.
From 2020 through 2022, Disney entered survival mode, which circles back to the first topic here. The company did just that.
Now, Disney has finished fiscal 2023 with vastly improved financials, and that’s after it cut an $8.6 billion check to Comcast.
Lately, investors have noted an inescapable truth about Disney. Its revenue has increased from $69.6 billion in 2019 to $88.9 billion in 2023.
That’s an improvement of $19.3 billion in four years, an average of $4.8 billion a year…and that’s with a pandemic reducing earnings.
Yes, Disney spent a fortune for Fox, but it’s had no problem paying its debt.
The company’s current long-term debt is $46.4 billion, which is down from $50.9 billion in October 2020.
Somehow, Disney has shaved its debt while facing the impossible. Now, the company has only blue skies ahead.
I say this because Disney’s “top-line results overall are 28% higher now than they were in fiscal 2019.” That’s not me saying that, either. It’s The Motley Fool.
Everyone keeps talking about the negatives with Disney, but the numbers tell a different story.
Even better, Disney used the past three years as a method of revealing previously unseen weaknesses within the company.
Now, a course correction is underway that has strengthened Disney’s foundation.
Running a business comes with one simple truth.
Once you get the math worked out in the corporate world, everything else comes more easily.
That’s precisely why Iger believes that Disney has exited the “fixing things” part of his return.
Now, his company is ready to build again. That’s when the fun stuff happens.
Disney isn’t randomly talking about theme park expansion. It mentions specific details.
Similarly, Iger hasn’t shown the willingness to sell Linear Networks or a piece of ESPN yet.
The CEO isn’t seeking to make any deal; he’ll only make the right ones. Leaders do that when they’re working from a position of strength.
The pandemic weakened Disney’s media stronghold, and we’ve just witnessed the final ramifications of that setback throughout 2023.
Now, Iger and his team have rebuilt something stronger. That’s why I’m confident in Disney.
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Feature Photo: Disney