Disney Stock Falls as CEO Expresses Apprehension About Future of Networks Like ABC

A Disney+ streaming service sign is pictured at the D23 Expo at the Anaheim Convention Center in Anaheim, Calif., on Aug. 23, 2019. Robyn Beck/AFP via Getty Images

Disney’s stock price has declined in recent days following chief executive Bob Iger’s statements that networks like ABC no longer constitute the company’s “core” business, and there were possibilities of selling such businesses.

In a July 13 interview with CNBC, Mr. Iger was asked whether the company would consider selling its TV networks, including American Broadcasting Company (ABC), FX, ESPN, Fox, and National Geographic. “We’re going to be expansive,” Mr. Iger replied. “We have to be open-minded and objective about the future of those businesses … We’re very objective about their future as part of our asset base.” When asked whether these networks were not core to Disney’s business, Mr. Iger said that “they may not be core Disney. Yeah.”

Disney CEO Robert Iger visits FOX Business Network's 'Markets Now' at FOX Studios in New York City, on Sept. 24, 2013. Photo by Michael Loccisano/Getty Images

“Now, there’s clearly creativity and content that they create that is core to Disney. But the distribution model, the business model that forms the underpinning of that business—and that has delivered great profits over the years—is definitely broken and we have to call it like it is,” he said.

On July 13, Disney was trading at $90.47. It fell 5.42 percent to $85.56 on July 17, before slightly recovering to above $86 as of 3:25 p.m. EDT, July 20. Between July 13–19, the company’s market cap declined by $6.27 billion.

While Mr. Iger’s comments may have contributed to the decline in Disney’s shares over recent days, the stock has been faring poorly since peaking in early February. Disney traded at $113.21 on Feb. 2 and is now down by around 24 percent—a loss of nearly $48 billion.

The stock’s negative performance is being blamed on multiple factors like poor theme park attendance, dismal subscriber numbers at the Disney+ streaming service, poor box-office numbers from the latest Disney movies, and the ongoing strikes by Hollywood writers and directors.

Low Theme Park Attendance

Attendance at Disney theme parks has suffered in recent times, with some seeing it as a sort of conservative backlash against the company’s woke advocacy.

The firm has been in a political and legal fight with Florida Republican governor Ron DeSantis after it opposed a bill banning discussion of gender identity or sexual orientation from kindergarten through third grade.

According to tracking data provider Touring Plans, crowd sizes at the Walt Disney World on the Fourth of July weekend were “shockingly” thin. “This is not normal. These are not peak summer crowds. These are shockingly low crowds,” Becky Gandillion of Touring Plans said in a blog post.

A sign near an entranceway to Walt Disney World in Orlando, Fla., on May 22, 2023. Joe Raedle/Getty Images

Touring Plans uses a 10-point scale to measure crowd size. Between June 27–29, Disney’s theme parks on average scored six points. On June 30, the score dropped to five. On July 1, it fell to two, and then rose to three on July 2 and four on July 3.

“This is madness in a chart. We have a park at a crowd level eight and a park at crowd level one just three days apart,” Ms. Gandillion said. “We almost never see that, outside of party season at Magic Kingdom … The crowds on July 1 and 2 look more like Labor Day than July Fourth. This is absolutely crazy.”

Poor Streaming and Box-Office Numbers, Hollywood Strike

Streaming service Disney+ has posted disappointing subscriber numbers in the recent quarter, raising concerns about the future of the business.

Number of subscribers declined by four million in the second quarter ended March 2023. And though the business brought down losses, it still remains sizable. In the first quarter, Disney+ posted an operating loss of $1.1 billion, which was followed by a $659 million loss in the second quarter.

Meanwhile, Disney is facing some serious box-office flops. Though the company had big hits like “Avatar: The Way of Water,” “Black Panther: Wakanda Forever,” and “Doctor Strange in the Multiverse of Madness” last year, it also had major flops. “Strange World” is estimated to have lost above $150 million, “Amsterdam” $108 million, “Lightyear” $106 million, “Devotion” $89 million, and “Babylon” $87 million.

In 2023, apart from “Guardians of the Galaxy Vol. 3,” Disney’s other offerings have disappointed financially. “Ant-Man and the Wasp: Quantumania” is estimated to have lost tens of millions of dollars, “Elemental” flopped, and “The Little Mermaid” has underperformed. Disney’s latest movie, “Indiana Jones and the Dial of Destiny,” is also struggling to make returns.

Members of the Writer’s Guild of America and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) picket together outside Disney Studios in Burbank, Calif., on July 18, 2023. Jill McLaughlin/The Epoch Times

Amidst these financial pressures, the WGA’s strike and the SAG-AFTRA’s strike complicate things for Disney. Strikes tend to spike up production costs of ongoing projects to the extent that it can negatively affect their profitability.

Moreover, the disruption can delay the release of new content on Disney+, thus failing to meet customer demand. Investors may be looking at these developments warily.