Skip to comments.Disney Is in a Death Spiral and I Don't See Bob Iger Reversing It
Posted on 07/15/2023 12:00:00 PM PDT by workerbee
The Death Spiral. When companies enter it, I always go back to the legendary quote from Supreme Court Justice Potter Stewart (he was offering an opinion in a case regarding hard-core pornography): ''I know it when I see it."
I onboarded a new account this week, and one of the first things we did was dump Disney (DIS) . The client had some other long-term winners, and I let those go, but as far as DIS, I couldn't wait to dump that one and put it into one of my beloved preferreds, in this case we chose (PACWP) , PacWest's 7.75% preferreds, which are trading at over a 35% discount to par.
But why pick on Disney? As I read this morning's screaming headline on CNBC.com, "Wells Fargo says Disney shares to rally 60% with Iger's possible divestitures adding $10 a share," I chuckled as I saw DIS shares falling yet again today. In fairness, I didn't read the Wells Fargo report on DIS, although I have accounts with Wells and certainly could access that report, if I wanted to. But I don't want to. As a former sell-side analyst, I know all-too-well that many of them never "know it when they see it" until it is far, far too late.
The problem is that the Mouse House has an Elephant in the Room. We all know it. I am sure the Wells Fargo team does too, but it is just so obvious when looking at recent box office results. The phrase is a cute one, but also valuable for investors: Go Woke Go Broke.
I don't want to deliver a discourse on Disney's battle with Florida Governor Ron DeSantis over the (formerly) specially-legislated status of the land containing Disney World. I avoid politics whenever possible. But as a stock analyst, I never avoid articles like this one in the WSJ about a marked decline in attendance thus far in summer 2023 at Walt Disney World and Disneyland.
The economy is not great and things are still much more expensive than they were before the pandemic. Used cars have been a big downdraft in recent CPI reports, which has sparked Wall Street's "inflation is over" narrative, but airfares, the CPI constituent most relevant to Disney's theme parks, have actually been rising significantly in recent months.
I get all those things. But are people not taking summer vacations - if they weren't, airfares would be declining, not rising - or are they just choosing different destinations?
I believe it is the latter.
The answer is even more clear when it comes to Disney's filmed entertainment business. According to boxofficemojo.com, Disney only has three of the top 10 grossing films thus far in 2023, By all accounts Indiana Jones and the Dial of Destiny (I haven't seen it, although Raiders of the Lost Ark will always be one of my favorite films) has been a major box office flop.
Yet, Sound of Freedom, produced by 20th Century Fox in 2018 and then shelved by DIS after it bought its rival, has had an unprecedented box office run for an indie film. I have not seen that film, either, and I won't enter a discussion about its merits. That said, I am in South America now on a business trip for ExCap (Sound of Freedom was mostly filmed in Cartagena, Colombia) and I know that human trafficking is a major concern on this continent. That's all I will say. I will avoid third rails.
But how on earth did Disney leave a movie that will end up grossing $100 million domestically (it has already grossed $53.9mm heading into this weekend, according to boxofficemojo.com) "in the can " for years, before finally sloughing it off on movie upstart Angel Studios?
Simply put: Disney's management decisions have turned people off. The brand is damaged. I know it when I see it, and thus I dumped DIS, which hasn't declared a common dividend since 4Q19, as soon as I saw it in this new client's account.
Will Bob Iger reverse that? By going on CNBC and intimating that ESPN is for sale, as Iger did earlier this week? Not likely. By "divesting" assets that would "add $10/share" (which would only add 11% to DIS value), according to the report this morning from WFC's analyst? No. If Disney were to become a seller, as Iger hinted, then Disney would own less (or control less, if a joint venture were the preferred structure for dumping ESPN) content.
And that content, seemingly, is the one valuable thing that Disney has. No one else owns Mickey Mouse, Donald Duck, Princess Leia or Buzz Lightyear. Or even Indiana Jones. But Disney, as I mentioned in my prior Real Money column on the name, has found an extraordinarily effective way of offsetting the goodwill created by these characters.
Disney's brand is decaying. I know it when I see it. So does anyone with access to stock quotes. I just don't see Bob Iger reversing the Death Spiral. Continue to avoid DIS.
Iger just had his contract extended
The woke know how to destroy a corporation, cater to a small minority of mentally ill circus idiots and your done. The power of the purse and the sane American people have spoken
Disney is taking it up the ***.
I have heard BlackRock is subsidizing the losses “for the cause”.
“Disney is taking it up the ***.”
Exactly, and the reason for Disney’s demise.
“Snow White and the Seven Individuals” will only add to the misery.
Snow White’s hair is a disaster and there’s only one dwarf. Ridiculous.
Shareholders should file a lawsuit. Disney has a fiduciary responsibility to them.
Disney has such a broad portfolio, they can cull non-core business lines to return to profitability. ESPN, Hulu, ABC, Fox Entertainment - all dead weight, not critical to their core line. Why Disney acquired these is puzzling.
Iger acquired Luscasfilm, Pixar, and Marvel and destroyed them in record time. Their upcoming slate of movies is more hot garbage. Disney+ ain’t looking good either.
Disney demands equity
Blacks and Queers and Dykes must all be presented with an equality that is simply non existent
Of course one must be general but admit there are specifics
Last year Disney made empty threats about shutting down Dismal World and moving out of FL. Let it happen, if they don’t go under. It would have a short term negative economic impact, especially around Orlando. But Disney ain’t the only rodeo in town and business, like nature abhors a vacuum. Florida has had a robust tourist industry since decades before Walt threw that ceremonial first clod of dirt in that swamp that became the “happiest (?) place on earth”.
He didn’t mention the biggest elephant in the room. Disney is on the hook to buy Comcast’s share of HULU for at least $9 billion, probably more.
They don’t have the cash to do it, especially if their parks revenue is starting to rollover.
That means very high-priced debt, which will add to their troubles.
If you steer the jet into the ground, don’t be surprised when it crashes.
It's Bud Light. Disney has been ****s-out to suppress any article that makes the comparison, but the Mouse videos that Libs of TikTok posted earlier this year, particularly the one of the freaky fat bearded f-g being one of the shopping conceirges at the Princess shop and greeting the kids as they run up to the entrance, yeah, no, not handing over $500 or more in that shop to support that.
Iger is back to do one thing -- hand over the Magic Kingdom keys to another company, whether that is House of Saud (possible) or Comcast (likely, combining Universal with Disney, then spinning off ABC and possibly ESPN).
Can’t speak for anyone else, but Sound of Freedom was about the only movie I wanted to watch from any studio going into the summer. I do want to see Oppenheimer.
Enjoy making money without decent white people.
Equity activists are outraged over the disappearance of ‘white guilt’ that justified DEI’s existence
after Disney, Netflix, Warner Bros, and others lose money, force out their high-paid loser DEI chiefs
The Blaze ^ | July 12, 2023 | Carlos Garcia
Posted on 7/13/2023, 7:57:28 AM by Twotone
EDITED-—Racial equity activists are outraged after several large companies dropped their diversity, equity, and inclusion consultants......after huge company losses.
The outrage was documented in a report from the Los Angeles Times that noted the exits of DEI experts at Disney, Netflix, the Academy of Motion Picture Arts and Sciences, and Warner Bros’ Discovery.
“I wake up every day trying not to be a cynic, but this is frightening,” Vic Bulluck of the NAACP Hollywood bureau ignorantly stated.
“Hollywood seems to be sending a message that these programs that were designed to (gag) “give more access to African Americans” are no longer needed.”
The report noted that all of the DEI chiefs dismissed were black women.
Business strategist Kim Crayton claimed that she predicted that the corporate support of DEI programs would be short-lived.
“2020 was the year that we were definitely making strides — but there wasn’t any strategy, there wasn’t any plan,” she explained.
“It was a PR moment — corporate blackface,” she added. “I told people at the time: ‘White guilt isn’t going to last.’”
Disney, Netflix, and Warner Bros. Discovery told the Los Angeles Times that these criticisms were inaccurate and that they were still committed to the cause of equity and diversity.
Crayton facetiously went on to say claim that DEI consultants were too busy “having to deal with white people’s feelings” to make any lasting change about inequity.
“If you don’t have the autonomy, the resources or the authority to make changes, it won’t work,” she said speaking in a total vacume, without a scintilla of factual proof. “Many of these women spend the majority of their time “navigating white people’s feelings’ — and you cannot do the work if you have to do that.”
Former NBC Universal diversity chair Paula Madison put her own biased spin on it.
“In many instances, other than receiving humongous salaries, the person in those roles has no power,” Madison explained. “These DEI officers are just treading water — and sometimes they are drowning. These things were never designed to be successful.”
The exasperation of DEI proponents was mirrored by that of LGBTQ activists who complained that corporations had been backing off from their support of the far-left movement during the very lucrative Pride Month.
Let’s hope so.
A glimmer of hope!
These corporations don’t understand. They are selling optional not essential.
I keep opening websites for stores where, I used to drop big bucks for 4 kids every season and just closing the sites.
Every kids’ item is modeled by an ethnic minority the more ethnic the better. There are beautiful models of all nationalities who would not cause any issue but the choices are made to show wokeness.
Today Desigual, Joules, Boden, JCrew, and Abercrombie made zero $ from me. Disney themed clothing is a big NO as well. I’m not surprised the crowds have thinned. Disney is no longer family oriented and the experience has been degraded.
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