GAAP, or generally accepted accounting practices, are the bread and butter of the ethics behind Disney Q3 reports. After some incidents with alleged shareholder deceit, it looks like the Walt Disney Company is making efforts to improve investor relations.
Walt Disney World Success: It All Comes Down to Digits
Disney World might be thriving and Walt Disney animations might be raking in the greenbacks. Many a Disney Park could break records and the world could love CEO Bob Iger and former CEO Bob Chapek. But without the support of Wall Street wolves; the stakeholders in the company, there’s no leg to stand on.
The Walt Disney Company recently released its Disney Q3 reports, and they yielded some insight into how CEO Bob Iger (and the Walt Disney CFO) choose to report their numbers. Some things line up like it is a successful quarter. But the methods of reporting leave questions about the ethics of the Walt Disney Company’s reporting methods.
Disney World, Disney Plus, and Walt Disney Branding
When Disney reports its Q3 earnings, it’s relative to the Walt Disney Company fiscal year, not the standard calendar quarter. There are some interesting ways that Disney Q3 reports present, including the fact that the company uses a one-quarter over three-quarter spread to assess its numbers.
This can leave those with shares in the company confused about the growth rates it is actually seeing. Three things are clear:
- Walt Disney Theme Park income is steady, remaining relatively stable over the course of the one and three-quarter spreads.
- The entertainment distribution channels are a high-cost endeavor but appear to factor heavily into brand recognition.
- Disney’s direct-to-consumer options show a financial hemorrhage on paper but are part of encouraging guest spending.
Confusion Within Standard Accounting (GAAP) Expectations
Unlike many other companies informing stakeholders with a share in the company about their second-quarter facts, the Walt Disney Company does things differently. For one, it segments its books based on units. This means that looking at an earnings report won’t necessarily provide the actual insight stakeholders need to perform an analyst estimate.
What This Says About The Walt Disney Company
It shows a separation of books, using entertainment distribution on one side, Disney subscribers in another report, and continuing operations like theme parks in a different segment altogether. This means that higher costs for consumers are harder to understand, not because of inflation, but because the books require collating and cross-referencing.
This, coupled with the nine-month fiscal year and lack of reporting for the prior year in the current reports, shows a potential for obfuscation of fact. It’s not to say that all the facts aren’t present, rather that the interim CFO oversees books that are spread in an unusual manner for GAAP standards.
What do you think about the Walt Disney Q3 reports? ‘Smoke and mirrors’, or literal cashflow for smoke and mirrors. Share your thoughts in the comments below!