Industry Insider: The Walt Disney Experience, Walking Through The 4th Quarter

The Walt Disney Company held its fourth-quarter earnings call on November 8th. Much of the information presented strongly insinuated the future of the company as well as soothed the many concerns consumers have had throughout 2023. Bob Iger, Disney’s CEO, was the first to take control of the call. The first way he did this was by leading the call with the announcement of Hugh Jonston’s onboarding as permanent CFO. While he wasn’t on the call, the relief of reinstating the structure is an important component to maintaining the strength of Disney’s vitality and power. So, Kevin Lansberry, interim CFO, reaffirmed Iger’s projections with data-based measures that solidified the suspected advancements. 

“Q4 adjusted earnings per share nearly tripled over the prior year.”

The quote above was the first evaluation that Iger made in regard to the fourth quarter. It can’t be neglected as it is nearly an irrefutable fact that the Disney company is highly confident in its business status and performance. Of course, the first assumption as to why could be attributed to the cross-media assets that are under the Disney brand. Including but not limited: to film production, park businesses, and children's toy lines to name a few. Iger acknowledges each of these but expands on them with nuanced introspection. 

Iger highlights the ever-growing success of the Disney+ platform that has magnified the financial profit of their biggest blockbusters this year. For this reason, the company looks to the streaming platform as an effective enhancement tool in its arsenal. This quarter alone saw a significant growth of subscribers, adding an additional  7 million to the platform. With the full membership subscription count rising to 112 million with this new addition. Iger contributes this to films such as The Guardians of the Galaxy, The Little Mermaid, and Elemental. Both the theatrical releases and Disney+ releases act as almost a cross-promotional experience for consumers. Disney+ and Hulu have great accomplishments with their original content with titles such as Ahoska and The Kardashians. Through streaming Disney has also captured the attention of international audiences with the premiere of their Korean original series on Hulu, Moving. All of this is meaningful after Iger announces that Disney will finally merge the stake held by Comcast under the Disney brand. 

Disney+ can contribute much of its increasing membership to the introduction of the AVOD model subscription. Iger reports that 50 percent of the platform’s new users opt for this membership style with 34 percent of these users spending more time using the service. Although there has been great backlash for the monetary increase year over year for Disney+’s highest subscription tier, Iger has initiated a merger between Hulu and Disney+ which will begin beta testing in December 2023. So it will be interesting to keep track of the response of this merger from current and past Disney streaming platform patrons. 

“We expect that Hulu on Disney+ will result in increased engagement, greater advertising opportunities, lower churn, and reduced customer acquisition costs, thereby increasing our overall margins.”

Expanding Disney’s portfolio in 2024, Iger presented the lineup of films that are expected to maximize their audience turnout and financial profit. Some of these titles included: Deadpool 3, Kingdom of the Planet of the Apes, Inside Out 2, Mufasa: The Lion King, and sequels to Toy Story, Frozen, Zootopia, and Avatar franchises. The development of the catalog isn’t exclusive to film production. The entirety of 2023 saw the entertainment sector add another $800 million in operating income growth in comparison to the year prior.

“Over the last 5 years, return on invested capital has nearly doubled in our Domestic Parks, and we have seen sizable increases over that same timeframe across the total Experiences portfolio as well – not to mention the improved guest experience ratings we’re now seeing at every one of our parks.”

In terms of the overall financial statements that are presented by Lansberry the positioning of cash flow covers a large portion of that basis. Cash flow was closed out at $5 billion for the fiscal year, which on a percentage basis demonstrates a 7% increase for the total company revenue. Of course, as seen across the board in 2024 the advertisement market has bred a barren waste for affiliate revenue within numerous companies that depend on it. Subsequently, Disney’s linear channels: ABC and ESPN, were affected with a 4% drop in their domestic entertainment sector. 

Lansberry’s final remarks detail a well-equipped agenda to maintain Disney’s financial elevation in 2024. The expenditures calculated for 2024 can be encompassed by the expected capex evaluated to be $6 billion. The experiences that will be covered are predominantly based on the Disney cruise experience as there are plans to launch new lines in 2025 and 2026. The overall entertainment cash content had a heavy reduction due to the strikes greatly affecting the match of the 2023 projections and performance. Now the cash content will be expected to be $4.5 billion in order to keep in line with cost savings year over year. With Lansberry’s financial delegation and Iger’s leadership, 2024 may keep in tune with the favorable outcomes seen in 2023.