Disney’s stock was downgraded by investment company KeyBanc Capital Markets over fears of stalled growth due to lower attendance at its Disney World and Disneyland theme parks and lower streaming viewership.
KeyBanc analysts reduced Disney’s rating from overweight to sector weight, coming as the firm carried out more layoffs at ESPN. The company, which also owns ABC News, announced layoffs earlier this year.
In a note, Mr. Nispel made reference to several areas of concern for Disney, including stalling direct-to-consumer subscriber growth, sagging content sales, a “materially harder” plan for ESPN to migrate to streaming, and fears that its U.S. theme park visits may stagnate.
“We prefer to step aside, acknowledging meaningful uncertainty, and wait for further catalysts, as buying the dip has been a losing trade,” he wrote to clients, noting that there are “more negative than positive [near-term] catalysts.”
Mr. Nispel also predicted that Disney will see a “deceleration of revenue” between the third and fourth quarters, according to reports. That comes in contrast to views expressed by executives at Disney, who have been bullish on revenue this year.
As of July 5, Disney’s stock stood at about $89. Even after it brought back CEO Bob Iger in recent months, the company’s stock remains far below its early 2021 peak of $200 per share.
While Mr. Nispel and many other analysts have made no mention of Disney’s wading into social issues, some consumers and conservative influencers called for a boycott in 2022 of the multinational media corporation after it publicly opposed a Florida law that prohibits teachers from instructing young children on transgender issues and sexuality, among other topics.
Florida. Gov. Ron DeSantis ended a decades-long deal allowing Disney World to govern its vast Central Florida resort by itself. The Republican governor has explained that the action was aimed at holding Disney accountable.
“The corporate kingdom finally comes to an end,” he said in February. “There’s a new sheriff in town, and accountability will be the order of the day.”
Last month, Disney’s chief diversity officer, Latondra Newton, reportedly departed the company. Notably, Ms. Newton was criticized in 2022 after she confirmed that Disney World would no longer use “ladies and gentlemen, boys and girls” for its fireworks display.
“We want to create that magical moment with our cast members, with our guests,” Ms. Newton said when making the announcement. “And we don’t want to just assume because someone might be, in our interpretation, may be presenting as female that they may not want to be ‘princess.’”
Layoffs
In an announcement this year, Mr. Iger confirmed that Disney will slash about 7,000 jobs to cut costs. As part of that effort, ESPN last week announced that it'll part ways with some major on-air talent.“Given the current environment, ESPN has determined it necessary to identify some additional cost savings in the area of public-facing commentator salaries, and that process has begun,” ESPN stated in an announcement on June 30. “This exercise will include a small group of job cuts in the short-term and an ongoing focus on managing costs when we negotiate individual contract renewals in the months ahead.
“[The cuts are] an extremely challenging process, involving individuals who have had tremendous impact on our company.
“These difficult decisions, based more on overall efficiency than merit, will help us meet our financial targets and ensure future growth.”
ESPN’s top NBA color commentator, former New York Knicks head coach Jeff Van Gundy, is also leaving the channel, according to reports. Unconfirmed reports said that former NBA player-turned-commentator Jalen Rose, former NFL star Keyshawn Johnson, and former quarterback Steve Young were also among those who were laid off on June 30.
Suzy Kolber, a longtime ESPN host, wrote on Twitter that she’s among those who were terminated.
“Today I join the many hard-working colleagues who have been laid off,” Ms. Kolber wrote. “Heartbreaking—but 27 years at ESPN was a good run.”
The sports network also canceled its national morning radio show with Max Kellerman, Jay Williams, and Johnson, the New York Post reported, citing anonymous sources.
Other top ESPN personalities have indicated that they may get the axe. Stephen A. Smith, who has been with ESPN since 2003, said regarding the layoffs, “more [are] coming.”
“And yes, ladies and gentlemen, I could be next,” Mr. Smith said during his radio program this week.
