Disney misses 4th Quarter Earnings, investment in parks down $632M in 2021 vs 2020

[Aluminum Falcon]

A lot of people have said so long as Bob Chapek is making shareholders happy, he will keep his job. What happens if customers dislike Bob Chapek and shareholders aren't happy with poor earnings resulting in lower share prices (and so far no dividends since 2019)?

This is only 1 bad quarter, and 1 quarter doesn't translate into failure - but I wonder how much past quarters have been things Bob Iger had setup before he stepped down as CEO and what is actually Bob Chapek?

Just wondering how long of a leash do you give Chapek - does another bad quarter mean his job is on the line, 3 bad quarters, 4?

I would wager that they would let him string along 3-4 bad quarters in a row before any significant rumblings. I think his leash is a little longer bc Disney hates hiring outside of the company since Eisner for some reason, not to mention it took Iger forever to find a successor with multiple step backs (I would say finding a worthy successor was Iger biggest failure, especially given the amount of time he had to do it). That all being said, I think the jury’s still out on chaepek, and we will have to see how he starts moving the company in a post COVID time

 

[Aluminum Falcon]

Then again, there isn't a disney family member to raise their hand and say things arent going right. Roy E. Disney did that in the past.

I think the company has matured past needing a family member to step up, social media makes it a lot easier to point out failure in this day, so it’s easier to force a company into moving on. I would also say back then Disney needed to find its identity, and Ron miller definitely didn’t fit the bill. The second go round, Disney had ballooned to such a massive company through Eisner, so much so that it made it almost impossible for the board to turn on him, public sentiment turned, and they gave him the boot. Chaepek isn’t even in the same weight class as Eisner, and if he does a bad job out of the gate, the board would have a much easier time removing him IMO anyways

 

[Devil13]

i dont think i see it as the beginning of the end, i think Disney would dump the CEO and get back to basics if things got bad.

Then again, there isn't a disney family member to raise their hand and say things arent going right. Roy E. Disney did that in the past.

That's sort of what I meant. Current CEO will continue to cut value and raise prices until the numbers show a consistent downward trend and at that point, there will be a new CEO who will swing the other way.

As many have said, the real problem is us. If we keep paying for Genie+ and parties and Uber/Lyft to the hotels they will keep raising those prices and cutting services. I assume everyone has a breaking point but until enough people reach it, this will continue.

Take the parties this year. Make all the excuses you want but slapping the words "After Hours" on the banner doesn't suddenly make it worth $100+ more. Lower crowds and all. Didn't make a difference. They keep selling out. Will they sell out next year at $300/person? Probably. $400? Maybe. $500? Who knows? They key is that they are going to look for the highest price that they can possibly charge for the same thing you got before. The scenario at play is that Bobby C charges 2K a person for the parties before they go empty and park revenue goes down. He gets canned, new guy comes in and lowers the price to the $1500 that they could sell out for and looks like a hero. Meanwhile, the same thing was $80 in 2019.

They aren't "boiling the frog". It's all coming at once. Think of all the changes. Magical Express, party prices, hotel prices, reservations, Genie+, pay per ride, AP changes, merchandise prices, after hours only for deluxe, food sizes coming, etc. All with COVID as an excuse.

I typically fly down and go to the parks for a week at a time with my family of 4 and stay on property. I'm taking a Lyft to my hotel. I've already shelled out 5K+ for APs now I gotta make a reservation (that may not be available), wait until 2:00 to go to another park when I get there AND pay another $500 to get on rides without a hour wait (theoretically) and another $60 to ride Rise and $800 for a party that we would typically go to?

That's a SIGNIFICANT increase from what I paid 18 months ago.

They are going to lose my AP money, my hotel money, my food money and whatever else I buy down there. I just hope enough people do the same to bury them.

That was a long rant but the bottom line for me is that a place I loved so much, for so long, now I can't root hard enough for them to fail miserably in everything that they do.

 

[Donald-Duck-QUACK-TASTIC]

They aren't "boiling the frog". It's all coming at once. Think of all the changes. Magical Express, party prices, hotel prices, reservations, Genie+, pay per ride, AP changes, merchandise prices, after hours only for deluxe, food sizes coming, etc. All with COVID as an excuse.

I typically fly down and go to the parks for a week at a time with my family of 4 and stay on property. I'm taking a Lyft to my hotel. I've already shelled out 5K+ for APs now I gotta make a reservation (that may not be available), wait until 2:00 to go to another park when I get there AND pay another $500 to get on rides without a hour wait (theoretically) and another $60 to ride Rise and $800 for a party that we would typically go to?

That's a SIGNIFICANT increase from what I paid 18 months ago.

They are going to lose my AP money, my hotel money, my food money and whatever else I buy down there. I just hope enough people do the same to bury them.

That was a long rant but the bottom line for me is that a place I loved so much, for so long, now I can't root hard enough for them to fail miserably in everything that they do.

Some great points in here. I do feel there will be a backlash but it will be delayed. People paying the high prices now are doing so because they've waited through the pandemic. Give it a year when people have traveling "out of their systems"and I wonder what park attendance, after hours events participation, etc looks like.

 

[Aluminum Falcon]

Some great points in here. I do feel there will be a backlash but it will be delayed. People paying the high prices now are doing so because they've waited through the pandemic. Give it a year when people have traveling "out of their systems"and I wonder what park attendance, after hours events participation, etc looks like.

I agree with you, i know the only reason we did the boo bash, was because we hadn't gone on vacation in 3 years, and figured, screw it might as well

 

[Jrb1979]

I understand the love most have for Disney and are sad to see it in the position it's in right now. I get that people haven't had vacation in awhile but there is many other parks out there to visit. Listening to the Dis yesterday, there is a lot of people switching to Universal.

 

[Donald-Duck-QUACK-TASTIC]

I agree with you, i know the only reason we did the boo bash, was because we hadn't gone on vacation in 3 years, and figured, screw it might as well

You know, sometimes things just have to get worse before they can get better.

Going through Chapek may lead to us getting the best Disney CEO in decades. A 5th gate that is mind blowing in it's respectful, near perfect execution. A return to perks, etc.

Not saying any of that will happen, but you almost want someone BAD that triggers a reaction the other way, as opposed to someone in the middle that might linger on in the role for 15 years while the parks languish.

 

[Aluminum Falcon]

I understand the love most have for Disney and are sad to see it in the position it's in right now. I get that people haven't had vacation in awhile but there is many other parks out there to visit. Listening to the Dis yesterday, there is a lot of people switching to Universal.

hard core fans who listen to the Dis seem to be moving on, but i would argue casual guests, (which i believe make up the bulk of guests by a long shot) are still rolling through. anything on the Dis is going to be amplified. Like turn it up to 11 and rip the knob off amplified

 

[Jrb1979]

hard core fans who listen to the Dis seem to be moving on, but i would argue casual guests, (which i believe make up the bulk of guests by a long shot) are still rolling through. anything on the Dis is going to be amplified. Like turn it up to 11 and rip the knob off amplified

I have been helping with converting the casual guests. Whenever I get asked if Disney is worth it I tell them not to bother. Word of mouth goes along way.

I disagree with it being amplified as I tend to believe Pete when he says they have more bookings for Universal then Disney right now.

 

[Donald-Duck-QUACK-TASTIC]

I have been helping with converting the casual guests. Whenever I get asked if Disney is worth it I tell them not to bother. Word of mouth goes along way.

I disagree with it being amplified as I tend to believe Pete when he says they have more bookings for Universal then Disney right now.

To me, the only thing that really matters is does Disney realize they've got a problem? Investor calls are not the best indicators as they mostly serve the purpose of convincing investors everything is great.

But, has Disney become so sure of itself / full of itself that even with lower attendance and resort bookings they'll brush it off as no big deal? How long can Universal gain ground before Disney is forced to react in a sizable way? I haven't even mentioned Epic Universe and their new resorts.

The landscape in Orlando is going to shift dramatically in the next 5 years.

 

[BrianL]

To me, the only thing that really matters is does Disney realize they've got a problem? Investor calls are not the best indicators as they mostly serve the purpose of convincing investors everything is great.

But, has Disney become so sure of itself / full of itself that even with lower attendance and resort bookings they'll brush it off as no big deal? How long can Universal gain ground before Disney is forced to react in a sizable way? I haven't even mentioned Epic Universe and their new resorts.

The landscape in Orlando is going to shift dramatically in the next 5 years.

I don't think they are ignoring it. With some of the rumors of more entertainment offerings coming, I think they may be seeing exactly what we're all seeing. How fast they react to that will be key, but it sounds like they may be starting to come around. D23 should be pretty interesting.

 

[OKW Lover]

Just to jump on the thought that Disney is continuing to invest - this is the lowest investment year by dollar since 2013, not accounting for inflation...
For theme parks & resorts only (I previously had an error in my first post which was for all capital expenditures, not just parks & resorts), capital expenditures by year:

• 2021: $2.27 billion
• 2020: $2.90 billion
• 2019: $4.14 billion
• 2018: $3.88 billion
• 2017: $3.19 billion
• 2016: $4.22 billion
• 2015: $3.60 billion
• 2014: $2.69 billion
• 2013: $2.11 billion

With inflation, $2.11B in 2013 is worth about $2.5B today, if you account for inflation - you have to go back to 2010 to see a smaller capital expenditure number ($1.53B in 2010, or $1.9B in today's dollars) - likely due to economic issues brought about by the housing bubble in 2008. Disney is not in that same situation now though, there has been a travel boom and pent up demand...

In other words, the investment amounts have varied considerably over the past 10 years. This could be just a down year.

 

[Lee Matthews]

I’m of the mindset to just ride out the next few years of Disney management and just have to hope Chapek is replaced with someone more caring. And this isn’t Josh d’maro

 

[Jrb1979]

I don't think they are ignoring it. With some of the rumors of more entertainment offerings coming, I think they may be seeing exactly what we're all seeing. How fast they react to that will be key, but it sounds like they may be starting to come around. D23 should be pretty interesting.

Entertainment coming back doesn't fix a lot. There is still a lot of stuff that has been cut that's not coming back.

 

[BrianL]

Entertainment coming back doesn't fix a lot. There is still a lot of stuff that has been cut that's not coming back.

No there is, but it's a move in thw right direction. My point is that they can turn things around if they act swiftly. Hopefully we are seeing the signs that they are doing so, though there is still much more to do.

 

[CBMom01]

Some great points in here. I do feel there will be a backlash but it will be delayed. People paying the high prices now are doing so because they've waited through the pandemic. Give it a year when people have traveling "out of their systems"and I wonder what park attendance, after hours events participation, etc looks like.

This is a really good point

 

[Donald-Duck-QUACK-TASTIC]

Entertainment coming back doesn't fix a lot. There is still a lot of stuff that has been cut that's not coming back.

At some point they will have to bring value and perks back. I hope what they're doing is just a knee jerk reaction to make up for lost pandemic profits.

When you're number one in your industry, the sharks are always circling. Disney knows this. If not...

 

[Jrb1979]

At some point they will have to bring value and perks back. I hope what they're doing is just a knee jerk reaction to make up for lost pandemic profits.

When you're number one in your industry, the sharks are always circling. Disney knows this. If not...

From what some have said a lot of what's been done is not knee jerk reaction at all. A lot of this stuff they have always wanted to do. Paid FP is something they have wanted to do. I wouldn't be surprised Magical Express being cut has been on the table for a long while as well. I believe the in park stuff will come back but the days of free dining or free Genie+ I doubt happens for a long time if ever. The best you will get is room discounts for next while.

 

[Kbrb]

From what some have said a lot of what's been done is not knee jerk reaction at all. A lot of this stuff they have always wanted to do.

Of course they have wanted to cut costs forever, covid gave them the perfect excuse to do so. But just because they want to does not always make sense to do so.

It will take about a year for the lag of the last year or so to really translate im reminded of the lord of the rings quote

"the dwarves delved too greedily and too deep. You know what they awoke in the darkness" The answer seems to be "people go to universal"

 

[OKW Lover]

I know this is an old thread but just saw a story this morning that the CFO, Christine McCarthy, has had her contract extended to 2024. She's the one that commented about corporate belt tightening during the analyst call.