While Disney Parks & Resorts have overall seen a strong increase in this third quarter of 2023 over the previous cycle, this is being attributed to strong performances from international destinations and the Disney Cruise Line. Domestically, the situation has been a little more disappointing.
Domestic Parks Stall
At Walt Disney World, attendance dropped while “higher costs and lower volumes” were blamed for lackluster performance. Star Wars: Galactic Starcruiser is also causing “accelerated depreciation” as it permanently closes, though the company does plan to write off $300 million from the process. Disney Vacation Club has also been experiencing lower unit sales.
CEO Bob Iger was still positive about the American parks, stating Disneyland had slight increases while Disney World is performing better than it did before 2020.
Walt Disney World is still performing well above pre-COVID levels.
Guest satisfaction has also reportedly been holding up well.
Internationally, parks revenue is up 94% from the previous year. Higher operating results at international parks and resorts were due to growth at Shanghai Disney Resort and, to a lesser extent, Hong Kong Disneyland Resort. The increase at Shanghai Disney Resort was due to the park being open for all of the current quarter compared to 3 days in the prior-year quarter as a result of COVID-19 related closures. Higher operating results at Hong Kong Disneyland Resort were due to guest spending growth and higher volumes, partially offset by increased costs driven by inflation.
Guest spending growth was primarily due to an increase in average ticket prices. Higher volumes were attributable to increases in attendance and occupied room nights. Results at Hong Kong Disneyland Resort reflected the park being open for 72 days in the current quarter compared to 54 days in the prior-year quarter due to COVID-19 related closures.
At Disneyland Resort, higher attendance and increased guest spending were largely offset by higher costs driven by inflation. Guest spending growth was primarily due to an increase in average ticket prices.
Growth at Disney Cruise Line was due to an increase in passenger cruise days, partially offset by higher costs associated with our ongoing fleet expansion and increased depreciation. The decrease in the merchandise licensing business was due to lower revenue from merchandise based on Star Wars, Toy Story, and Avengers.
There has certainly been tumult in the third quarter, with dramatic shifts and disappointing performances at the box office impacting Disney as a whole. CFO Christine McCarthy stepped down from her position while Iger’s public perception was damaged after calling demands from striking actors and writers “not realistic.”
While “Indiana Jones and the Dial of Destiny” and “Haunted Mansion” have not been financially stellar, other films such as “Elemental” have made a surprise comeback — while Iger has also discussed opportunities to “turbocharge” theme park growth.
In Florida, there’s an ongoing legal battle with Florida Governor Ron DeSantis over the governance of the area in which Walt Disney World is located, though Iger and the company are continuing to pursue the matter in court, with the CEO himself stating it is “not our goal to be engaged in a culture war.”
The Walt Disney Company in Q2
Previously, The Walt Disney Company announced approximately $21.8 billion in revenue during the second quarter of 2023. Their adjusted earnings per share (EPS) was $0.93, a decrease from $1.08 in last year’s quarter. This was for the period of January 1 to April 1, 2023. Disney Parks reported $7.78 billion in revenue during quarter two and Disney+ lost 4 million subscribers (but the financial performance of streaming did improve, as Iger said).
Throughout the second quarter, and continuing until the end of May, Disney completed three major rounds of layoffs in an aim to cut coasts within their media operations.
CEO Bob Iger has extended his return as leader of the company through 2026 and brought back former colleagues Kevin Mayer and Tom Staggs to advise on television strategy moving forward. In a recent major upheaval of their TV properties, ESPN will now be launching a sportsbook with PENN Entertainment, officially becoming a major player in legal sports betting.
Here’s a selection of major stories from today’s earnings call compiled below: