3 questions Disney needs to answer this week
The world’s most successful entertainment company is about to prove it’s more than just a Mickey Mouse company. waltz disneyit is (SAY 3.50%) reports shortly after Tuesday’s market close, and there’s a lot going on these days with the market barometer.
Let’s go through some of the questions Disney might be asking on Tuesday. Let’s also evaluate the likely answers.
1. How much money are its theme parks losing?
Disney theme parks have opened around the world in the last three months. It’s just the original Disneyland in California that hasn’t reopened yet. Hong Kong Disneyland temporarily closed last month after an increase in COVID-19 cases.
Safety was the paramount concern when resuming operations at its closed attractions, and Disney passed that test with flying colors. The media would have already let you know if the Disney parks were a hotbed of contagion.
The concern now shifts to the profitability of operations, as this is the ultimate test of sustainability. Right now, it doesn’t look like Disney is in the dark with its theme park segment. Strict capacity limits on daily footfall, travel restrictions and general pandemic concerns are weighing on the business. However, making money right now is not the primary goal.
‘We’re still doing better financially than if we were closed,’ Disney rival Comcast (CMCSA 0.07%) said of its Universal Studios theme parks in Florida and Japan during last week’s earnings call.
Comcast lost a lot of money in its resorts in Q2, but the fact is, it would lose even more money if it wasn’t open. Comcast is able to perform better in a difficult climate, and creating jobs for employees and escape opportunities for customers also has a selfless sheen. Let’s see if Disney can say the same about its early reboot efforts.
2. Will more theatrical releases debut on Disney+?
Disney’s hand was first forced to bring multiplex consumer-grade content to its new Disney+ service. Ahead played for two weekends before the cinemas closed. Disney thought there would be no turning back, making the smart move to offer it digitally and through the Disney+ platform it launched in November.
Socket Ahead literally like marching orders, Disney would supplant other future theatrical releases, including Artemis Poultry, The one and only Ivanand more famous hamilton to its Disney+ slate. Most of his upcoming movies are just pushed further with new release dates. The highly anticipated Mulane the live-action movie saw its release date arrive hit at least twice since Disney’s last earnings call.
However, given all the favorable buzz Disney got by rushing hamilton, Aheadand Frozen II to its streaming service, it wouldn’t be surprising if others followed suit. It would be interesting to see Disney explain the verification process.
3. When will media networks feel the content pinch?
Along the same lines as Disney’s pipeline for theatrical and streaming releases, Disney’s media networks division could also be facing its own crisis. Productions have been largely suspended, even as Disney’s ABC rolls out new general hospital shows this week. It’s also good news for ESPN to see major pro sports return, but some of these restarts seem to be built on a house of cards.
Disney is a media giant in every way, and its cable and broadcast networks have provided a fiscal sanctuary from disruption elsewhere. However, even Disney’s all-weather media networks need a content plan. We’ll see what the House of Mouse has to offer investors shortly after Thursday’s market close.
Rick Munarriz owns shares of Walt Disney. The Motley Fool owns stock and recommends Walt Disney. The Motley Fool recommends Comcast and recommends the following options: $60 long calls in January 2021 on Walt Disney and $125 short calls in October 2020 on Walt Disney. The Motley Fool has a disclosure policy.