Disney is hurting for cash

[CastAStone]

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

And? That’s why they took on the debt, so they wouldn’t be cash strapped.

 

[mshanson3121]

And? That’s why they took on the debt, so they wouldn’t be cash strapped.

Meaning if the only way someone has a bunch of cash on hand is because they have massive debt they're not exactly in "great financial shape". It just means they made a move which was necessary to survive, but that's it. All that debt will have to be paid back, which will take it's toll. It's a safe assumption knowing OP, that they weren't referring to literal cash on hand, as much as just the fact that they're hurting financially, in general.

That said, admittedly, this all falls under the"obvious" category. All businesses are hurting right now.

 

[RamblingMad]

Meaning if the only way someone has a bunch of cash on hand is because they have massive debt they're not exactly in "great financial shape". It just means they made a move which was necessary to survive, but that's it. All that debt will have to be paid back, which will take it's toll. It's a safe assumption knowing OP, that they weren't referring to literal cash on hand, as much as just the fact that they're hurting financially, in general.

That said, admittedly, this all falls under the"obvious" category. All businesses are hurting right now.

They can do secondary offerings of stock and pay down their debt if necessary. Their stock price is still strong.

 

[New Mouse]

Meaning if the only way someone has a bunch of cash on hand is because they have massive debt they're not exactly in "great financial shape". It just means they made a move which was necessary to survive, but that's it. All that debt will have to be paid back, which will take it's toll. It's a safe assumption knowing OP, that they weren't referring to literal cash on hand, as much as just the fact that they're hurting financially, in general.

That said, admittedly, this all falls under the"obvious" category. All businesses are hurting right now.

They are hurting for cash in the sense that the execs will not earn bonuses and stock holders will lose money...yes... but they are not hurting in a sense that the company is in trouble in the slightest.

 

[wdwoutsider]

They are hurting for cash in the sense that the execs will not earn bonuses and stock holders will lose money...yes... but they are not hurting in a sense that the company is in trouble in the slightest.

That is very inaccurate. We need to see Disney's cash burn rate on 8/4 and then in November with the parks open with such limited capacity. Disney cancelled so many construction projects specifically to save money. Also don't you remember disney took out billions in loans already to enhance cash reserves.

 

[YesterDark]

One of the things I've had a hobby of recently is watching a lot of videos questioning the making of the new Star Wars movies which lead me down a rabbit hole of people talking about rumors and business decisions inside the building of Lucasfilm. There was even a thread/portion of a thread talking about the rumor a week or two ago.

Disney is going to go hard at rebuilding the Star Wars brand and it starts with the Mandalorian and Disney+ shows/cartoons. Disney is about making cash and they are looking to make Star Wars as big as a blockbuster as the MCU. That process will start in 4-6 years as the build up excitement for the IP again.

With that being said, it's going to be very interesting watching what Disney invests money in RIGHT NOW when cash is tight. This will show what the future of the company will be banking on. Construction going full steam ahead on the Star Wars Hotel/Experience? Kind of shows you something. Look for similar investments in to different studios and Disney+ content. It'll show you a roadmap to where Disney is going to go.

 

[dvc lover 1970]

As a shareholder in the current circumstances, I vote for #1. The problem with WDW isn't that people don't want to go. The problem is people, literally, can't travel there. States with travel restrictions, schools and employers forcing people to quarantine if they go and the international market (particularly Brazil, Australia and the UK) completely cut off from traveling to Orlando are going to make a huge impact on their revenue (or lack thereof). There is zero reason to invest in new rides or experiences and try to incentivize people to travel to enjoy them if they have no way to travel there. It's the same reason Mulan keeps getting pushed back. No point in releasing it into theaters when you know you, literally, will have no audience to see it. WDW's summer revenue has already been crushed. When school starts and guests from drive-in states aren't going, it's going to get worse.

I am not a fan of Iger nor have I ever been and was sad when Staggs left. I disagree with your first premise: that people cannot go to disney due to state imposed travel restrictions but people really do want to go and would go if not for travel restrictions. We love disney and own close to 1000 dvc points spread over 4 resorts, but I would not go near orlando with a ten foot pole right now. It is a covid petri dish. I am not about to intentionally run to an area where covid is spreading faster than breeding rabbits.

 

[dvc lover 1970]

One of the things I've had a hobby of recently is watching a lot of videos questioning the making of the new Star Wars movies which lead me down a rabbit hole of people talking about rumors and business decisions inside the building of Lucasfilm. There was even a thread/portion of a thread talking about the rumor a week or two ago.

Disney is going to go hard at rebuilding the Star Wars brand and it starts with the Mandalorian and Disney+ shows/cartoons. Disney is about making cash and they are looking to make Star Wars as big as a blockbuster as the MCU. That process will start in 4-6 years as the build up excitement for the IP again.

With that being said, it's going to be very interesting watching what Disney invests money in RIGHT NOW when cash is tight. This will show what the future of the company will be banking on. Construction going full steam ahead on the Star Wars Hotel/Experience? Kind of shows you something. Look for similar investments in to different studios and Disney+ content. It'll show you a roadmap to where Disney is going to go.

Disney had a gold mine with Star Wars, but they did not follow Lucas's vision. For the die hard SWs fans, it killed the empire. The die hard fans is a base disney could not afford to loose, as that is an automatic cash in hand and that base helps to energize the rest. Disney was wrong to throw away the the original exapanded universe. Many die hard fans (including me and my family) have walked away from SW's and now have zero interest in it. We were originally very excited for the new hotel - zero desire to stay there now. My son has sold all his SW's collectibles. I wish Lucas sold SW's to Universal instead of Disney.

 

[savvy101787]

I am not a fan of Iger nor have I ever been and was sad when Staggs left. I disagree with your first premise: that people cannot go to disney due to state imposed travel restrictions but people really do want to go and would go if not for travel restrictions. We love disney and own close to 1000 dvc points spread over 4 resorts, but I would not go near orlando with a ten foot pole right now. It is a covid petri dish. I am not about to intentionally run to an area where covid is spreading faster than breeding rabbits.

I agree with that completely. There's a reason the US tourism industry is pushing for a tax-deductible travel credit - the demand just isn't there for travel right now.

 

[jkh36619]

Disney had a gold mine with Star Wars, but they did not follow Lucas's vision. For the die hard SWs fans, it killed the empire. The die hard fans is a base disney could not afford to loose, as that is an automatic cash in hand and that base helps to energize the rest. Disney was wrong to throw away the the original exapanded universe. Many die hard fans (including me and my family) have walked away from SW's and now have zero interest in it. We were originally very excited for the new hotel - zero desire to stay there now. My son has sold all his SW's collectibles. I wish Lucas sold SW's to Universal instead of Disney.

I cant disagree with the Universal comment.

 

[YesterDark]

Disney had a gold mine with Star Wars, but they did not follow Lucas's vision. For the die hard SWs fans, it killed the empire. The die hard fans is a base disney could not afford to loose, as that is an automatic cash in hand and that base helps to energize the rest. Disney was wrong to throw away the the original exapanded universe. Many die hard fans (including me and my family) have walked away from SW's and now have zero interest in it. We were originally very excited for the new hotel - zero desire to stay there now. My son has sold all his SW's collectibles. I wish Lucas sold SW's to Universal instead of Disney.

I agree somewhat, but the issue with SW is not Disney overall it's Kathleen Kennedy. Disney is at fault for maybe giving her too long of a leash.

Not speaking to you personally, but if hardcore fans are not excited about Mandalorian and what it MAY mean for the franchise, they should be. I'm willing to bet anything that if Lucasfilm got on the right track again (Filoni and Favreau with creative) you can easily win back the die hards. You just have to prove that you have competent people in control (which it hasn't).

 

[BrianL]

Disney had a gold mine with Star Wars, but they did not follow Lucas's vision. For the die hard SWs fans, it killed the empire. The die hard fans is a base disney could not afford to loose, as that is an automatic cash in hand and that base helps to energize the rest. Disney was wrong to throw away the the original exapanded universe. Many die hard fans (including me and my family) have walked away from SW's and now have zero interest in it. We were originally very excited for the new hotel - zero desire to stay there now. My son has sold all his SW's collectibles. I wish Lucas sold SW's to Universal instead of Disney.

Well, I'm a "Hard Core" SW fan and I haven't been turned off at all. I have enjoyed all of the new Star Wars projects and don't see it as an either-or scenario either. Somehow I doubt many of these fans would've been too happy with George Lucas's vision either if the PRequels ar eany indication (I also enjoy those).

 

[Eric Smith]

Disney had a gold mine with Star Wars, but they did not follow Lucas's vision. For the die hard SWs fans, it killed the empire. The die hard fans is a base disney could not afford to loose, as that is an automatic cash in hand and that base helps to energize the rest. Disney was wrong to throw away the the original exapanded universe. Many die hard fans (including me and my family) have walked away from SW's and now have zero interest in it. We were originally very excited for the new hotel - zero desire to stay there now. My son has sold all his SW's collectibles. I wish Lucas sold SW's to Universal instead of Disney.

Lucas's vision gave us the prequel movies. Let's not act like he is infallible.

 

[YesterDark]

Lucas's vision for the prequels was fine from a 30k ft view. The details, the script, the editing, the direction was very poor. The successes from of the OT were in part can be accredited to the people he surrounded himself with. We would have never seen Empire if his wife didn't edit A New Hope.

Lucas should be part of development for sure, but not really someone who is in overall control.

 

[TommyJK]

Lucas's vision gave us the prequel movies. Let's not act like he is infallible.

As a die-hard fan, I think when it comes to the prequels, the story itself is good, they just faltered on execution (primarily script/directing).

Get George to write the overall story, and hand the duties of the script and directing to someone else.

Edit: or what @YesterDark said

 

[gatour]

Meaning if the only way someone has a bunch of cash on hand is because they have massive debt they're not exactly in "great financial shape". It just means they made a move which was necessary to survive, but that's it. All that debt will have to be paid back, which will take it's toll. It's a safe assumption knowing OP, that they weren't referring to literal cash on hand, as much as just the fact that they're hurting financially, in general.

That said, admittedly, this all falls under the"obvious" category. All businesses are hurting right now.

You don't understand how "leverage" works in the business world.

The Fed rate is now 0% and and bank loan rates reflects this somewhat. If a company has cash on hand and expected revenues will increase while interest rates also raise. It makes sense to take out loans at a historically low rate. They can then pay back the low interest loans with the increased loans.

This is a common business strategy even before covid.

Basic ECO101

 

[bookwormde]

They can do secondary offerings of stock and pay down their debt if necessary. Their stock price is still strong.

or they can just sell some of the treasury stock from buy backs

 

[azdisneylover]

I haven't seen anyone mention the contract ESPN has signed with UFC. Disney is pulling in $$$ from this venue. The cost for fights have gone up big time and the fights are on ESPN or ESPN+. Last week there were 3 fight nights. Lots of commercials and product banners, etc throughout the venue were shown live, from "Fight Island".

 

[TiggerBouncy]

You don't understand how "leverage" works in the business world.

The Fed rate is now 0% and and bank loan rates reflects this somewhat. If a company has cash on hand and expected revenues will increase while interest rates also raise. It makes sense to take out loans at a historically low rate. They can then pay back the low interest loans with the increased loans.

This is a common business strategy even before covid.

Basic ECO101

This.

I remember my business finance teacher telling us to "Get used to debt" and we spent a very long time on Good Debt vs Bad Debt. He maintained that a company without any debt was a bad company indeed and would soon be an ex-company. Heck, even Apple - considered one of the healthiest companies in the world right now - has over 100 BILLION in debt. Now, they have more cash then they do debt and that's a good thing, but they are an unusual company in many ways.

But debt in and of itself is not a bad thing at all and in fact is generally healthy. What we care about are things like the EBITDA, D/E, DTI, etc. In the case of something like this with a global pandemic, it is expected that Earnings will be limited, so we expect things like the DTI to be horrible for some time. Although at the beginning of the year, this was caught by surprise, by this time it's been baked into the calculations, so it's not as dangerous. Disney is sitting on about 60 billion of debt, which may sound like a lot - but for a company that has a typical cash flow of over 80 billion a year, it's really not, and although that cash flow will lower FOR A TIME, it will eventually recover and the market knows that. So from a credit rating standpoint, Disney will have no problem getting the loans it needs with very good terms. Heck, I would sooner trust Disney as an investment then Government Bonds right now.

Point being, from a financial health standpoint, The Walt Disney Company is still very strong. This pandemic will slow down many of their investments. We probably won't see Reflections built for some time (and the final product may be much different). The 2 new cruise ships will almost certainly be delayed (the ones after the Wish). Some of Epcot's plans will be scaled back. Outside of the parks, I expect there will be some wide spread cuts in content that is less guaranteed. We will see a lot of cut movies and tv shows. However none of these spell doom for the company.

 

[Jrb1979]

https://blogmickey.com/2020/07/the-...ney-world-vacation-and-the-slow-summer-ahead/
Lex Luthor (Bob Chapek) was wrong. The demand is not there. Its also not at regional parks either. A lot of parks across the US are going to be in some trouble by the end of this. Disney will be fine they will just cut a lot of attractions that were planned.

They said WDW was leaving money on the table staying closed

They said the economy would come roaring back if we just opened again.

Apparently most would rather go to beaches or national parks are they are either free or cheap.