Disney is hurting for cash

[RanDIZ]

This post is complete conjecture and nonsense.

Wall Street average estimates for the Quarter from April 1 - June 30 is a $1bn loss.

Disney had $14bn cash on hand on March 31st.

The end.

And they offset the Q2 $1.4B loss by suspending the dividend of $1.6B. With cash and $17B in available credit, I’m sure they’ll be just fine.

 

[MinMou]

I agree with most of this. But the cash problem won't go away over night as they'll have to send more cash to debt servicing and pay off. Luckily for them, the larger companies are getting it at very good rates. But companies like Royal Caribbean will have a significantly worse cash position for years, even if their business returns to 2019 levels in January.

Look at American Airlines after 9/11, they held on for 10 years, but eventually went into chapter 11 due to the debt load they'd taken on to avoid bankruptcy in the post-9/11 years, even though they had record revenue.

Signing Kaepernick won't help their money problems.
Nike declared a $790M loss last quarter.

 

[rteetz]

Signing Kaepernick won't help their money problems.
Nike declared a $790M loss last quarter.

Every company is facing issues right now. There is no avenue around that until the world is more stable.

 

[Mit88]

Netflix did not need original content when it first came out.
When the service first rolled out they had good licensing deals with the content providers.
It was not until the content providers started jacking up the licensing costs that Netflix started to make their own content.

The point is, these streaming services don’t need to roll out an entire library of original content on Day 1 to have long term success. Quibi, all original content. 70% of people that had a free trial let their trial run out and cancelled. HBOMax has very little in terms of original content, and nothing that compares to Mandalorian. Peacock just rolled out with 1 original show and a very weak back catalog movie library. Disney has far more original content planned out than both HBOmax and Peacock, and once Falcon and the Winter Soldier drops, it looks to be that there will be high profile original shows overlapping each other through 2021. Are they going to have as many original shows/movies as Netflix in the future? Probably not. But for every 1 original show or movie that Netflix makes and has success, there are 5 that are made that doesn’t have widespread appeal. I’d rather Disney concentrate on their individual projects than just throwing stuff at the wall and hope it sticks.

 

[shafke]

But for every 1 original show or movie that Netflix makes and has success, there are 5 that are made that doesn’t have widespread appeal. I’d rather Disney concentrate on their individual projects than just throwing stuff at the wall and hope it sticks.

Yes and no. If you just stick with what works all you are left with are a bunch of sequels and the same old universes. They should still take a chance on new/different ideas.

When was the last time Disney put out a movie that was not based on
- an existing universe... Star Wars, Marvel, etc.
- a fairy tale/princesses
- a theme park ride (I believe these are some of their worst performing movies)

We are long past the time when Disney will take a chance on a movie such as Splash. They are even afraid to show this without edits for fear of offending someones puritan sensibilities.

 

[BrianL]

When was the last time Disney put out a movie that was not based on
- an existing universe... Star Wars, Marvel, etc.
- a fairy tale/princesses
- a theme park ride (I believe these are some of their worst performing movies)

Very recently actually - just the past 5 years:

The Call of the Wild (Fox) 2020
The Nutcracker and the Four Realms - 2018
A Wrinkle in TIme - 2018
Queen of Katwe - 2016
The Finest Hours - 2016
Tomorrowland - 2015

That's only theatrical stuff too. Do you know what all of those movies have in common? They were all disappointments at the box office, many of them major flops. It's unfortunate because there are some good movies in there, but they don't perform. It's not Disney, it's audiences. They WANT remakes and sequels and big franchises. Why should Disney make a Tomorrowland and take a loss on it when they can do a live action <insert 90's animated film here> and make at least $1B in box office?

 

[TiggerBouncy]

Protect your sources? That Disney is hurting for money after having basically every revenue stream except for Disney+ effectively chopped at the knees for 6 months?

I'm sorry, I don't mean to make fun of you, but the feels like an "also in the news, Water is wet. Filmed at 11".

Nothing said in here was a revelation, and pretty much all of it would be reasonably speculated on by anyone with common sense. Still, I expect Disney as a whole will survive and recover. But the ENTIRE travel industry - including airlines, cars, hotels, cruises, etc will take YEARS to recover from this - even if it ended tomorrow (and it won't). And there are repercussions around the entire globe and stretching into many industries. For example, Meyer Werft has already said they will be reducing capacity and laying off workers. Boeing too. Guess what? They buy steel. So, the steel industry will also suffer. This is true with the rental car business as well - not buying, then the car manufacturers hurt, and so does steel. These are just a few examples.

Point being - Disney is not the only one cash strapped. The entire travel industry is devastated. Most companies will be halting or looking for ways to trim investments unless they are cost cutting. This is to be expected.

 

[TiggerBouncy]

Yes and no. If you just stick with what works all you are left with are a bunch of sequels and the same old universes. They should still take a chance on new/different ideas.

When was the last time Disney put out a movie that was not based on
- an existing universe... Star Wars, Marvel, etc.
- a fairy tale/princesses
- a theme park ride (I believe these are some of their worst performing movies)

We are long past the time when Disney will take a chance on a movie such as Splash. They are even afraid to show this without edits for fear of offending someones puritan sensibilities.

If we are talking about the streaming service though (since we are comparing to Netflix shows), Disney+ has a fair bit of original content that is not based on any of these things. Have you looked?

Examples: Prop Culture, Disney Insider, Gordon Ramsey Uncharted, World According to Jeff Goldblum, Be Our Chef, Pick of the litter, etc, etc, etc....

 

[New Mouse]

Very recently actually - just the past 5 years:

The Call of the Wild (Fox) 2020
The Nutcracker and the Four Realms - 2018
A Wrinkle in TIme - 2018
Queen of Katwe - 2016
The Finest Hours - 2016
Tomorrowland - 2015

That's only theatrical stuff too. Do you know what all of those movies have in common? They were all disappointments at the box office, many of them major flops. It's unfortunate because there are some good movies in there, but they don't perform. It's not Disney, it's audiences. They WANT remakes and sequels and big franchises. Why should Disnye make a Tomorrowland and take a loss on it when they can do a live action <insert 90's animated film here> and make at least $1B in box office?

Because you need new content for the future. You cant rely on existing properties forever.

 

[BrianL]

Because you need new content for the future. You cant rely on existing properties forever.

Hey, I agree with you in pinciple, but currently audiences won't get out and see original ideas. They lose money on them. Now, maybe if they could get the costs down, and not spend $250M on every movie, they might see some returns. Like, you do A Wrinkle in Time for $70M and it might do well enough to turn a profit. Still, it's not Disney. They are still putting out original ideas in animation, with both Onward and Soul in 2020.

 

[Disney Bobby]

Original ideas are great, but they don't feel Disney. Disney's money is in the classics. There is a nostalgia factor that, at least for many, is timeless. A few films that come along have the potential to be classics one day, but it still won't be like the stuff Walt himself created. Original ideas should be a way to pull people into the Disney nostalgia that will always be what defines Disney and makes it special.

 

[OSUZorba]

Very recently actually - just the past 5 years:

The Call of the Wild (Fox) 2020
The Nutcracker and the Four Realms - 2018
A Wrinkle in TIme - 2018
Queen of Katwe - 2016
The Finest Hours - 2016
Tomorrowland - 2015

That's only theatrical stuff too. Do you know what all of those movies have in common? They were all disappointments at the box office, many of them major flops. It's unfortunate because there are some good movies in there, but they don't perform. It's not Disney, it's audiences. They WANT remakes and sequels and big franchises. Why should Disnye make a Tomorrowland and take a loss on it when they can do a live action <insert 90's animated film here> and make at least $1B in box office?

This is the same reason IP is taking over every ride and night time show in the parks, too. People just want the familiar. That is why the millennial whoop is in like 80% of pop songs (and nearly every pop song is written by one of a few people). I personally don't get it.

Although to be a little fair to the general public, Wrinkle in Time and Four Realms got terrible reviews, not sure about the others. Casting Oprah for Wrinkle was a mistake IMHO, I have no issue with her, but every time I saw her in a preview I just saw "Oprah."

In that same time frame, Lionsgate killed it with Hunger Games, so it possible to branch out and do well.

 

[BrianL]

This is the same reason IP is taking over every ride and night time show in the parks, too. People just want the familiar. That is why the millennial whoop is in like 80% of pop songs (and nearly every pop song is written by one of a few people). I personally don't get it.

Although to be a little fair to the general public, Wrinkle in Time and Four Realms got terrible reviews, not sure about the others. Casting Oprah for Wrinkle was a mistake IMHO, I have no issue with her, but every time I saw her in a preview I just saw "Oprah."

In that same time frame, Lionsgate killed it with Hunger Games, so it possible to branch out and do well.

Oh certainly there is room to criticize the actual projects and mistakes were made with Wrinkle and Nutcracker, but the numbers still teach Disney that the remakes sell and original material doesn't. I agree that it is unfortuante, but the numbers guys only see that. It couldn't possibly be because they were bad movies after all!

 

[wdwoutsider]

Actually I wonder if, on a cash basis, Disney +might surprise during the quarterly report. If all production was shut down for most of the quarter, cash out the door should have slowed considerably while subscriber revenue upticked. But as you said, it's a tiny piece of the pie at this point.

This came up on the last quarterly earnings call kind of. Disney said that Disney plus is still 3-5 years to break even nothing has changed because even with increased subscribers they have much higher than expected costs for content. They have needed to fast track and early release alot of things they had planned on releasing later or slowly. Meaning they will will need to spend more for new content to replace things fast tracked now. The staying at home people are thirsty for fresh content. Still remains 3-5 years just to break even and that's all assuming it stays a huge hit and people don't move to the next one of many new streaming services.

I think the studios content is killing their theatrical releases and that's a whole different animal. That is probably a long time before we all crowd in a theater ?

 

[OppR2nist]

Very recently actually - just the past 5 years:

The Call of the Wild (Fox) 2020
The Nutcracker and the Four Realms - 2018
A Wrinkle in TIme - 2018
Queen of Katwe - 2016
The Finest Hours - 2016
Tomorrowland - 2015

You do realize the, with the exception of Queen of Katwe, Everything you mentioned is based on a previously existing IP, right?

 

[RivShore]

This came up on the last quarterly earnings call kind of. Disney said that Disney plus is still 3-5 years to break even nothing has changed because even with increased subscribers they have much higher than expected costs for content. They have needed to fast track and early release alot of things they had planned on releasing later or slowly. Meaning they will will need to spend more for new content to replace things fast tracked now. The staying at home people are thirsty for fresh content. Still remains 3-5 years just to break even and that's all assuming it stays a huge hit and people don't move to the next one of many new streaming services.

I think the studios content is killing their theatrical releases and that's a whole different animal. That is probably a long time before we all crowd in a theater ?

I agree that it won't change the overall future road to profitability. Was just speculating that the just ended quarter, on a cash flow basis only, might be better than expected since production costs would have been minimal during the shut downs.

 

[BrianL]

You do realize the, with the exception of Queen of Katwe, Everything you mentioned is based on a previously existing IP, right?

Yeah, but not in the sense that it was major Disney IP - they were not remakes or sequels and generally original content for Hollywood. I mean, Tomorrowland was pretty much wholly original except for the name. The Finest Hours was a true story. These are why Disney takes few chances on this stuff - but they still do, at least once or twice a year.

 

[mdsouth]

For me, the back catalog IS Disney+. The new stuff is nice too, but I have it to be able to explore almost a century of Disney content. I don't have kids either, I'm just a Disney fan.

I, too, am paying for a Disney+ subscription, 6.00 a month so that I can see all the old Disney content. I have kids, teenagers, but we have only seen two of the Mandolorian shows. I also watch the new documentaries Disney has (One day, Imagineers, etc) but for my family we are not into the Marvel comics, or big StarWars fans, and so what we watch are the old classic Disney movies, live action and animation but more of the live action ones like That Darn Cat.

 

[anthony2k7]

I wish there was more park stuff on disney+

I'd happily put Stacy on when there was nothing else I felt like watching!

 

[mshanson3121]

This post is complete conjecture and nonsense.

Wall Street average estimates for the Quarter from April 1 - June 30 is a $1bn loss.

Disney had $14bn cash on hand on March 31st.

The end.

Cash that they only had because of massive debt they took on....