A day after Trump supporters lay siege on the nation’s Capitol while lawmakers inside attempted to certify Joe Biden and Kamala Harris as the next president and vice president of the United States, Walt Disney Company CEO Bob Chapek took to social media to condemn the violence seen around the world.
Chapek said the riot was an “inexcusable assault on America’s most revered institution and our democracy,” — the latter prevailing in the early hours of Jan. 7 when Congress certified Biden and Harris’ Nov. 3, 2020 election win.
Chapek, who was named CEO in February, replacing Bob Iger, who became executive chairman, said the time calls for the nation to be united by “our shared values, including decency, kindness and compassion for others.”
“We should seize this opportunity, and move ahead with optimism and hope for a better, brighter future for all of America,” he wrote on Twitter.
With the Walt Disney Co. set to hold a virtual Investor Day today (Dec. 10) after the market close, Wall Street has already popped Champagne bottles in anticipation of positive news on the company’s streaming video initiatives and vaccine-related impact on parks and amusement business.
Disney shares closed Dec. 9 at a record high following multiple analyst reports projecting CEO Bob Chapek will deliver exciting news this afternoon regarding the company’s first PVOD release Mulan, another season of “The Mandalorian,” and possible transition of new “Star Wars” content from the big screen to streaming.
On the Disney’s last fiscal call (Nov. 12) Chapek said the Disney+ streaming service had topped 73 million subscribers — well ahead of company projections.
“Chuck the [dividend], torch [earns per share], spend aggressively, All Systems Go on streaming,” Steven Cahall, analyst with Wells Fargo, wrote in a note. “In other words, we think investors will soon be willing to pay a high multiple for a global streaming growth story. So, if one is excited about the sub growth story then the stock price should take care of itself, in our view.”
In the movie business, Disney’s Soul is set to go head-to-head with Warner Bros.’ Wonder Woman 1984 as the big Christmas Day digital debuts. Disney moved Soul from a November theatrical release to stream exclusively on Disney+, while Wonder Woman 1984 will be available on HBO Max and in theaters simultaneously.
“It seems now would be the perfect time for continued experimentation — a free pass to determine the right future distribution strategy for Disney’s ‘theatrical’ content,” Rich Greenfield with Lightshed Partners wrote in a note last month.
Greenfield argues that if streaming is Disney’s top priority, why is major TV content such as “The Bachelorette” and “Dancing With the Stars” not premiering on Disney+ or Hulu, with delayed airings on linear TV?
“Why should any compelling TV or film content that can be shifted to streaming first, not be shifted to streaming first?,” Greenfield wrote.
Morgan Stanley analyst Benjamin Swinburne expects Disney+ to end Fiscal Year 2025 with 145 million paid subscribers with revenue of nearly $11 billion in FY25. The analyst believes that combined with Hulu, ESPN+ and Star, Disney could see 250 million total streaming subs by 2025 generating more than $33 billion in revenue.
“Fiscal 2020 [direct-to-consumer segment] losses came in at $3.3 billion, below the original implied guidance for $3.5 billion to $4 billion by our estimates, with much stronger customer growth partially offset by Disney leaning in on marketing,” Swinburne wrote. “For fiscal 2021, we increase our estimate of DTC losses to $4 billion to $4.5 billion and forecast profitability on DTC in 2024.”
Disney shares remain up in midmorning trading at $154.55 per share.
With much of its business units idled due to the coronavirus pandemic, Disney CEO Bob Chapek Oct. 12 announced internal restructuring that puts the focus on what is working: streaming video.
Disney is combining ad sales with distribution into a new Media and Entertainment Distribution group led by Kareem Daniel, who has served as president of consumer products, games and publishing. The media giant said the move is to put a “focus on developing and producing original content for the company’s streaming services.”
The new group will be responsible for all monetization of content — both distribution and ad sales — and will oversee operations of the Company’s streaming services. It will also have sole P&L accountability for Disney’s media and entertainment businesses.
This means that while Alan Horn and Alan Bergman, Peter Rice, and James Pitaro will continue to lead Disney’s studios, general entertainment and amusement parks, respectively, they will do so separate from streaming video.
Rebecca Campbell, who headed direct-to-consumer operations, which includes Disney+, ESPN+, Hulu, and pending Disney+ Hotstar, was upped to chairman of international operations and direct-to-consumer. All five executives report directly to Chapek, with Campbell reporting directly to Daniel.
“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our Company to more effectively support our growth strategy and increase shareholder value,” Chapek said.
The CEO said separating content creation from distribution would allow Disney to be more effective in making the content consumers want most, delivered in the ways they prefer it, i.e. over-the-top video, transactional VOD and PVOD.
Indeed, Disney+ had more than 60 million subscribers in August. The bundle of Disney+ with Hulu and ESPN+ has 105 million.
“Our creative teams will concentrate on what they do best–making world-class, franchise-based content — while our newly centralized global distribution team will focus on delivering and monetizing that content in the most optimal way across all platforms, including the coming Star international streaming service,” Chapek said.
“It’s a tremendous privilege to work with the talented and dedicated teams that will comprise this group, and I look forward to a close collaboration with the outstanding and incredibly successful team of creative content leaders at the company, as together we build on the success we’ve already achieved in our DTC and legacy distribution business,” Daniel said in a statement.
A 14-year Disney veteran, Daniel has held leadership positions across a variety of businesses, including consumer products, games and interactive experiences, publishing, studio distribution, and Walt Disney Imagineering. Prior to that, Daniel was VP of Distribution Strategy at Walt Disney Studios, where he worked closely with the leadership in developing the company’s film content distribution strategy across multiple platforms and played a key role in the commercialization of the studio’s films.
“As we now look to rapidly grow our direct-to-consumer business, a key focus will be delivering and monetizing our great content in the most optimal way possible, and I can think of no one better suited to lead this effort than Kareem,” Chapek said. “His wealth of experience will enable him to effectively bring together the company’s distribution, advertising, marketing and sales functions, thereby creating a distribution powerhouse that will serve all of Disney’s media and entertainment businesses.”
Disney reports fourth-quarter (ended Sept. 30) fiscal earnings Nov. 5.
The Walt Disney Co.’s calculated foray into premium VOD distribution for original movie Mulan reportedly has been a fiscal home run. Yahoo! Finance, citing data from 7Park Data, contends the movie has been purchased by 9 million Disney+ subscribers for $29.99 each through Sept. 12. That tally would suggest the $200 million budget movie, which was released on Sept. 4, has generated an impressive $270 million in direct-to-consumer revenue.
Unlike a typical PVOD transaction that gives a viewer a limited time period, usually 48 hours, to watch the movie, the Disney PVOD system, dubbed Premier Access, is set up to allow Disney+ subscribers to pay the premium fee to unlock the movie on Disney+ for as long as they are subscribers, effectively giving those who pay early access to the movie before it becomes available to all subscribers in a few months.
App download tracking firm Sensor Tower previously disclosed that downloads of the Disney+ app skyrocketed 68% through the Labor Day weekend (Sept. 4-6), compared with the previous-week time period. Samba TV, which tracks viewership on smart TVs, reported that 1.1 million U.S. households watched Mulan on Labor Day weekend.
Disney has not officially released any Mulan sales data, but CFO Christine McCarthy Sept. 10 told an investor group the media giant was “very pleased” with PVOD sales data thus far.
The results, if true, would be another dagger to the theatrical window and suggests that Disney’s theatrical brand resonates (at significantly higher margin) as much with consumers in the home as at movie theaters. Disney generated a staggering $11.1 billion at the global box office in 2019 — including 33% of all domestic box office ticket sales. It was the first time a studio had controlled that much of the North American box office since 1999, according to Comscore.
Regardless, the movie, which stars Liu Yifei in the iconic Mulan role, had received middling reviews, plenty of controversy over filming locations in China accused of violating the human rights of ethnic Muslims, and lackluster box office sales in the Communist country.
The Walt Disney Company June 10 announced plans to re-open its branded theme parks on July 17 — 65 years to the date Walt Disney opened the original Disneyland in Anaheim, Calif., in 1955. All domestic theme parks have been shuttered since mid-March due to the coronavirus pandemic.
Pending state and local government approvals, Disney’s Grand Californian Hotel & Spa and Disney’s Paradise Pier Hotel plan to reopen on July 23. Additionally, Downtown Disney District will begin re-opening on July 9.
Because theme park capacity will be significantly limited to comply with governmental requirements and promote social distancing, the Disneyland Resort will manage attendance through a new theme park reservation system that will require all guests, including Annual Passholders, to obtain a reservation for park entry in advance, according to Michael Ramirez, public relations director, Disneyland Resort.
“At this time, there will also be a temporary pause on new ticket sales and Annual Passport sales and renewals,” Ramirez wrote in a post, adding that parades and nighttime spectaculars will return at a later date. And character meet and greets will be temporarily unavailable.
Upon re-opening, a “Guest Experience Team” will be available throughout the parks and Downtown Disney District to assist visitors with questions regarding new social distancing policies.
“With the health of guests and Disney cast members at the forefront of planning, several operational changes will be implemented based on guidance from health authorities to promote physical distancing and cleanliness throughout the Downtown Disney District,” Ramirez wrote.
Walt Disney Studios plans to stick with the traditional 90-day theatrical window for all major movie releases, CEO Bob Chapek said from his home on the company’s May 5 fiscal call.
With Universal Pictures causing a maelstrom of controversy last month when it announced it would opt for concurrent theatrical and premium video-on-demand distribution for new move releases after generating $100 million from animated feature Trolls World Tour, Chapek said the results awakened Disney to the reality of alternative distribution — especially during the pandemic and unusual market conditions.
He said any changes to Disney’s theatrical distribution would be done on film-by-film basis going forward, including transitioning Artemis Fowl from the box office to Disney+ on June 12.
“With changes involving consumer dynamics or certain situations like COVID-19, we may have to make some changes to that [90-day theatrical] strategy just because theaters aren’t open or aren’t opened to the extent that [they’re] financially viable,” Chapek said.
He said that with other major Disney box office releases re-scheduled later in the year or into 2021, the studio “very much so” believes in the 90-day window for major movies.
Universal’s decision to include PVOD caused major exhibitors such as AMC Theatres and Regal Cinema to warn they would not screen any title being concurrently made available on digital platforms.
Chapek reiterated that Disney has dominated the global box office in recent years with its Marvel, Pixar and Star Wars movies. The studio generated about $13 billion in worldwide box office in 2019, including a record seven $1 billion releases, including latest Lucasfilm release Star Wars: The Rise of Skywalker.
Among media companies navigating the coronavirus, few are more in the fiscal crosshairs of the pandemic than The Walt Disney Co.
When the Mouse House and new CEO Bob Chapek disclose second-quarter fiscal results on May 5, scuttlebutt suggests a sobering fiscal reality underscoring the impact COVID-19 has had on the brand’s amusement parks, movie studio, cruise ships and consumer products — all of which have been shut down worldwide for almost a third of the fiscal quarter due to government mandates in place to stop the spread of the virus.
Disney last month cut executive pay and reportedly furloughed about 100,000 workers, many of whom worked at Disney’s shuttered Parks and Resorts, which include six amusement parks and cruise lines, and accounts for about 33% of Disney’s total revenue — a financial nightmare that continues to consume a third of the current Q3 period.
Disney’s studio business, which accounted for more than 40% of the global box office in 2019, has been shuttered since March. The studio has delayed launching tentpole titles such as Mulan and Black Widow, while releasing other titles to the upstart (and lone bright spot) Disney+ SVOD platform.
Disney, unlike Universal Pictures, is not in favor of bypassing the traditional theatrical window for premium VOD — even in a pandemic and despite Universal generating a record $100 million in PVOD revenue for animated release Trolls World Tour.
Analyst firm Lightshed Partners contends Disney would have to raise the price of Disney+ from $6.99 to upwards of $20 month to recoup the theatrical losses.
“How long can Disney wait or do you have to just acknowledge that film profitability will fall dramatically until consumers are comfortable again [frequenting movie theaters]?,” analysts Rich Greenfield, Brandon Ross and Mark Kelley collectively wrote in a note last month.
The analysts contend Disney is looking a minimum 30% drop, or $3 billion decline, in studio revenue this year — a figure that could top 50% if production and exhibition channels remain closed.
For the flagship ESPN pay-TV platform, with no live sports to broadcast or stream, subscriptions are expected to fall. Dish Network CEO Charlie Ergen is demanding ESPN reimburse it and other pay-TV distributors for the lack of content, among other issues. The executive cited legal “Force Majeure” (“unforeseeable circumstances that prevent someone from fulfilling a contract”) to get out of Dish’s ESPN retransmission contract.
“U.S. multichannel video subscribers effectively paid ESPN $650 million in April to watch one original series (Chicago Bulls/Michael Jordan documentary ‘The Last Dance’) with literally no live sports on TV or for their talk show hosts to even talk about,” Greenfield wrote.
Longtime Disney bull Michael Nathanson downgraded Disney shares from buy to neutral, citing “significant and unrivaled earnings risk for the foreseeable future.”
Meanwhile, other analysts suggest the virus is just a temporary obstacle. Alexia Quadrani, analyst with J.P. Morgan, early last month said the virus represented a short-term issue for Disney that could be negated by the brand’s skyrocketing appeal in direct-to-consumer streaming video.
“We are impressed with Disney’s ability to balance growth in its traditional businesses with investment in an incredibly successful streaming service,” Quadrani wrote on April 2 — before Disney began furloughing staff and cutting executive pay.
With a traditional media revenue businesses turned upside down by the coronavirus, and not wanting to wait for government bailouts, ViacomCBS and Charter Communications are the latest content creator/distributors to seek outside funding (and debt) to sustain operations.
Charter April 17 announced the closing of $3 billion in bonds, which include $1.6 billion of senior secured notes due in 2031, and $1.4 billion of senior secured notes due in 2051.
Separately, ViacomCBS said it would redeem all of its outstanding senior notes due on Feb. 15, 2021, and all of its outstanding senior notes due on March 1, 2021. The separate aggregate amounts of senior notes disclosed April 17 included $300 million and $500 million, respectively.
The moves come on the heels of major Hollywood players going to Wall Street in search of funding sources. AT&T sought upwards of $5 billion in loans, while Discovery pulled the trigger on $500 million of its credit line. Comcast sold $4 billion in debt while The Walt Disney Co. secured a $5 billion loan from Citibank.
“Right now, it’s all about liquidity,” Neil Begley, SVP of corporate finance group, told The Hollywood Reporter.
New Disney CEO Bob Chapek has been officially named to The Walt Disney Company’s board of directors, according to a regulatory filing. Chapek assumed the chief executive position in February after 15-year chief executive Bob Iger decided to step away from day-to-day operations.
“Bob Chapek has demonstrated remarkable leadership in the face of unprecedented challenges that were unimaginable when he became CEO just seven weeks ago, and we’ve watched him navigate this very complex situation with decisiveness and compassion,” Iger and Susan Arnold, independent lead director, said in a joint statement.
Iger, who assumed a newly created position of executive chairman of the board, earlier this week said he is returning to daily duties in an effort to assist Chapek as the latter confronts disastrous conditions across most Disney business units as a result of the coronavirus pandemic.
Prior to becoming CEO, Chapek served as chairman of Disney parks, experiences and products. During his tenure at Parks, Chapek oversaw the opening of Disney’s first theme park and resort in mainland China, Shanghai Disney Resort, and creation of the new “Star Wars: Galaxy’s Edge” lands at Disneyland and Walt Disney World. From 2011 to 2015, Chapek was president of the former Disney consumer products segment, where he drove a technology-led transformation of the business. He also served as president of distribution for The Walt Disney Studios, and was president of Walt Disney Studios Home Entertainment, where he spearheaded the successful “vault strategy” for the company’s legacy movies.
Disney reports second-quarter (ended March 31) fiscal results on May 5.
Taking advantage of low interest rates and its strong brand, The Walt Disney Co. said it has entered into a 364-day loan for upwards of $5 billion from Citibank, according to an April 10 regulatory filing. Disney said it would use the funds for general purposes.
The loan, which has different interest rates based on European and American currencies, is scheduled to mature on April 9, 2021. Disney has the option to extend the maturity for an additional 364-day period, subject to lenders’ consent.
Disney’s business units have been hammered by global shutdowns to prevent the spread of the coronavirus. The media company is reportedly losing $30 million a day since the closure of all its theme parks, cruise lines and movie and TV production studios and box office.
Disney has furloughed nearly 75,000 amusement employees. It has also asked for a 15% cut in salary from its ESPN on-air talent.