A Few Things We Just Learned About Disney

Disney just sent out all its bigwigs for a series of high-profile interviews.

Here are a few things we just learned about Disney during these conversations. And I’ll throw in one I suspect.

Disney isn’t Hiding

The stock market has behaved somewhat erratically lately. Maybe you’ve heard…

For this reason, several major CEOs have all but practiced “duck and cover” strategies during their quarterly earnings reports.

These executives are bracing for the worst, but they don’t want the accompanying fear and uncertainty to crash their stock prices.

Therefore, April and May earnings reports largely haven’t included guidance about future revenue expectations.

The C-suite executives knew that if they told the truth about their predicted revenue shortfalls, they’d be playing defense for the rest of the year…and possibly longer.

Bob Iger, the CEO of The Walt Disney Company, adopted an entirely different approach. He went on offense.

In NFL terms, he wanted the ball and knew he’d win. That’s because Disney enjoyed an advantage over other corporations.

Wall Street had already slammed $Dis, wrecking its value in a matter of weeks.

At no point did any data emanating from Disney suggest that this should happen.

It was entirely fear-based supposition caused by Disney’s international composition.

Everyone just assumed that Disney’s revenue would collapse due to anticipated budget setbacks in merchandising, entertainment, and theme parks.

Au contraire! Disney not only reported significant improvements in all its core segments, but it also updated guidance.

Specifically, the company increased its full-year EPS guidance to $5.75.

At a time when everybody else is hiding, Disney just ran into the room screaming, “LOOK AT US! WE ARE CRUSHING IT!!!”

Theme Park Business Is Good

For the past several quarters, Disney has faced recurring questions regarding the strength of the Experiences division.

For whatever reason, nobody wants to believe that Disney theme parks and the associated tourism businesses are doing well.

After last quarter’s earnings report, critics latched on to a modest decrease in operating income as proof that Disney was in trouble.

In this category, Disney once proved defiant, with the company even bringing receipts.

In an unusual move, Disney offered specifics about some of the various facets of its theme park empire.

We learned that operating income at domestic theme parks increased by 13 percent, tallying more than $1.8 billion on their own.

Do you know what that is? It’s a direct shot at Universal Epic Universe as well as a marker.

Iger and his team are letting everyone know precisely what its revenue was when Universal’s new park opened.

That way, there can be no confusion about whether the new park impacted Disney’s results.

Overall, this division increased its revenue by nine percent to $6.5 billion. That’s more than half a billion more than a year ago.

In fact, all the news was great, with Disney bragging about park attendance and hotel occupancy improvements. Basically, everything is great.

Finally, Disney even discussed its future bookings throughout 2025. The company indicated that any economic concerns shouldn’t affect Disney.

Disney Is Making More Money

Obviously, Disney wouldn’t improve its 2025 guidance unless everything was trending upward. That’s just common sense.

Still, in examining Disney’s core segments, you’ll notice a staggering amount of cross-division success.

As proof, let’s consider the numbers. Operating income in the theme park division improved by nine percent, the same as its revenue gain.

In the Direct-to-Consumer (DtC) division, which had previously been a losing segment, revenue improved by eight percent.

That’s only the small side of the story, though. Disney’s operating income gains were exponential.

During the same quarter in 2024, DtC turned a profit with $47 million. During this quarter, its gain was…$336 million.

Folks, that’s an improvement of more than a factor of seven! In just one year, this segment is netting nearly $300 million more.

A year ago at this time, DtC merely turning a profit was enough to induce headlines. Now, it’s legitimately profitable.

In the Entertainment segment, Disney improved its revenue by nearly $900 million, but that’s again not the story.

This division’s operating income increased by 61 percent (!) year-over-year.

The Sports division was the least successful core, as its operating income increased by “only” five percent.

Generally speaking, that’s a reasonable growth goal. Disney just had such an amazing quarter that a five percent improvement signifies its worst division.

We’re Going to Abu Dhabi!

So, I’m just going to level with you. I’m not a morning person. Throughout my life, I’ve been closer to a vampire.

Disney’s switch to 7 a.m. earnings reports isn’t ideal for me in that my brain typically needs a few hours to warm up.

I’d been up maybe 90 minutes when CNBC interrupted its weird ramblings about the movie Conclave for breaking news.

CNBC’s David Faber went live to report some most unexpected news. Disney will build a theme park in Abu Dhabi.

I sometimes chase stories about Disney theme park locations, which requires me to research local stories in various countries.

Over the past five years, the most often referenced locations were in India and Singapore, which I’ll detail in a different article.

Abu Dhabi has come up infrequently, but it’s usually due to the city’s addition of other theme parks like Warner Bros. World and Ferrari World.

As with the Las Vegas rumor I’ve dismissed multiple times, Abu Dhabi was mentioned more because it’s a tourist destination rather than anything specifically linked to Disney.

Well, that reality apparently changed last September when Miral officials hosted Iger and Disney Experiences Chairman Josh D’Amaro.

The Disney executives apparently sat through an elaborate pitch and identified an opportunity.

Miral offered Disney a similar deal to what it already has with the Oriental Land Company (OLC) at Tokyo Disney Resort.

OLC pays for everything as the park’s owner and operator. One of those expenses is a lucrative licensing fee paid to Disney.

Now, Miral will do the same, effectively doubling Disney’s passive income from theme park licensing fees.

At all other Disney theme parks, Disney owns at least 40 percent. Abu Dhabi will join Tokyo as locally owned.

By accepting this deal, Disney adds a revenue stream while knowing that the new park will be gorgeous and well-maintained.

Miral claims an exceptional reputation in the hospitality industry, and Yas Island is one of the fastest-growing tourism destinations in Asia.

The more Disney investigated this deal, the more Iger and D’Amaro warmed to the notion of Disney’s seventh park being in the Middle East.

So, the odds of my taking an 18-hour flight to Abu Dhabi changed from zero percent on Tuesday to a number larger than zero on Wednesday.

How about you? Do you plan on doing a combo Burj Khalifa/Disneyland Abu Dhabi trip?

Josh D’Amaro May Have Just Gone Ahead

I recently discussed the betting favorites to replace Bob Iger as CEO.

One of the points I made in the article is that gamblers give Disney Entertainment Co-Chairman Dana Walden a one-in-three chance.

That sounds terrific until you realize that she had been a two-in-three favorite until election night 2024.

Walden befriended Kamala Harris many years ago, and the two remain tight to this day.

With the sitting President of the United States known for being vengeful, his dislike of his opponent, Harris, damages Walden’s candidacy.

The whole thing is utterly ridiculous, and I’d ordinarily dismiss it as overblown.

However, there are rumblings that Disney’s Chairman of the Board, James Gorman, is wary of announcing a candidate that may antagonize the President.

As such, some believe that Walden’s stock is falling. Conversely, D’Amaro’s candidacy appears to be on the upswing.

Bob Iger previously credited the Chairman of Disney Experiences for the Fortnite/Epic Games deal.

Then, we watched D’Amaro appear beside Iger for the Abu Dhabi interview on CNBC.

Iger treated D’Amaro like his favorite pupil during this discussion.

In combination with D’Amaro speaking at an upcoming event, Iger is at least presenting his Chairman with an opportunity.

Since I’m on record as wanting D’Amaro to become Disney’s CEO, I’m delighted by this turn of events.

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