Disney Parks laying off 28,000 cast members

[Eric Smith]

Really though Disney isn't doing all they could.

They should be reducing ticket prices and resort prices. Havin enticements for people to come back.
show that they care about the loyal customers and loyal cast.

But my feeling is they want to hold on to the prices and now lower them because they still hold on to the illusions of things going back to normal and don't want to lower prices but just keep them at the same level.

Disney only has so much capacity in the parks so lowering ticket prices won't do much.

 

[middlechild]

Anyone know the terms of the contracts with unionized workers? My thinking is pay cuts for represented workers was NOT on the table, meaning pay cuts if necessary were not part of the last negotiated contract. Oh look - over at Blog Mickey they are reporting a negotiated raise takes effect today.

 

[Brianstl]

Anyone know the terms of the contracts with unionized workers? My thinking is pay cuts for represented workers was NOT on the table, meaning pay cuts if necessary were not part of the last negotiated contract. Oh look - over at Blog Mickey they are reporting a negotiated raise takes effect today.

The union workers would be idiots if they agreed to take pay cuts or delay wage increases.

 

[Disney Bobby]

The stock closed Friday down 20% from its 2019 high and 3% down since they announced the layoffs.

I stand corrected. It spiked in November, but dropped again in January before anybody was really worried about this pandemic. It's really off about 10% from the last pre-pandemic price. And even after the small drop after the layoff announcements, it's still higher than it was in early 2019.

Anyway, my point is, the sky is not falling. I suspect most of these layoffs were something they were already considering and the coronavirus is just cover for them.

 

[Disney Bobby]

The union workers would be idiots if they agreed to take pay cuts or delay wage increases.

Yep. They aren't stupid. They know these cuts to mostly low wage workers aren't saving the company. Just opportunistic cuts to get lean that will pay off even bigger on the flip side.

 

[RivShore]

I stand corrected. It spiked in November, but dropped again in January before anybody was really worried about this pandemic. It's really off about 10% from the last pre-pandemic price. And even after the small drop after the layoff announcements, it's still higher than it was in early 2019.

Anyway, my point is, the sky is not falling. I suspect most of these layoffs were something they were already considering and the coronavirus is just cover for them.

As a PP said, Disney+ is propping up the stock price. Without it, it would most likely be down around where it was during the great recession $25-$30. And before you say no way D+ means that much to the stock, please see NFLX.

 

[RivShore]

Anyway, my point is, the sky is not falling. I suspect most of these layoffs were something they were already considering and the coronavirus is just cover for them.

There's no way they were considering massive front line layoffs pre-pandemic. Those jobs just don't exist right now. CA is closed. FL is at reduced capacity. Tens of thousands of hotel rooms are shuttered. Social distancing issues around live performers.

Now the exec/management positions and some of the department eliminations included in the layoff - I can see them bringing that forward and lumping it all in with a big layoff announcetment. Common practice for large companies undergoing transformations for one reason or another.

 

[gottalovepluto]

Anyway, my point is, the sky is not falling. I suspect most of these layoffs were something they were already considering and the coronavirus is just cover for them.

Definitely not. They’re laying off entire divisions and gutting others. Heck, WDW is heading into it’s previously much touted 50th and the core division that refreshes and adds new things (Imagineering) is rumored to be a blood bath. There is no way they planned to lay off so much hotel staff they could shutter a bunch of hotels. Or lay-off the entire international and CP programs.

A business doesn’t have to turn a profit to have a sustained high stock price.

 

[Disney Bobby]

As a PP said, Disney+ is propping up the stock price. Without it, it would most likely be down around where it was during the great recession $25-$30. And before you say no way D+ means that much to the stock, please see NFLX.

Disney+ has a long way to go before it becomes NFLX, or even make any money. No way it's suddenly $100 of the $122 stock price. If that were the case, Disney stock should have been worth well over $200 a share before this hit.

 

[Disney Bobby]

Definitely not. They’re laying off entire divisions and gutting others. Heck, WDW is heading into it’s previously much touted 50th and the core division that refreshes and adds new things (Imagineering) is rumored to be a blood bath. There is no way they planned to lay off so much hotel staff they could shutter a bunch of hotels. Or lay-off the entire international and CP programs.

A business doesn’t have to turn a profit to have a sustained high stock price.

Maybe most is too strong a word, but they were definitely looking to get leaner. They were looking to get rid of the photopass folks well before this hit, replacing them with automated solutions. They were offering discounts to not use room service. Mobile check in and mobile food ordering to replace those service jobs.

Sure, some layoffs are directly related to this shutdown, but there is no doubt they were looking to reduce personnel anyway. Now they can layoff a ton of people and only hire back the few they wish to keep when everything comes back. It's common practice for companies to use hard times to cull the herd, even when the books say they don't need to do so.

 

[yulilin3]

Anyone know the terms of the contracts with unionized workers? My thinking is pay cuts for represented workers was NOT on the table, meaning pay cuts if necessary were not part of the last negotiated contract. Oh look - over at Blog Mickey they are reporting a negotiated raise takes effect today.

The pay raise was agreed to last year by the unions, there will also be another pay raise to $15 next year. This was all agreed to pre covid, the blogs treating this like breaking news is just click bait. There's also a big push from CM to not share these click bait sites as it's just promoting misinformation and confusion, but I don't see that happening any time soon
As for current situation they have informed the union CM that they are still negotiating. Back when the parks reopened the Attraction Union had Disney agree to bring back all attraction CM be it p/t or f/t so they are all working right now, at their attractions or in other venues that they have cross trained
This union is the only one I am closely familiar with, but anyone can go on their fb pages and check what each one is doing for their members.

 

[hertamaniac]

A business doesn’t have to turn a profit to have a sustained high stock price.

It often has a speculative future profit built into the price and not just the ttm. We look at the tourism stocks in general; arguably, there is a ton of upward hope already factored into their price.

 

[RivShore]

Disney+ has a long way to go before it becomes NFLX, or even make any money. No way it's suddenly $100 of the $122 stock price. If that were the case, Disney stock should have been worth well over $200 a share before this hit.

I actually used some quick research (possibly not terribly accurate) to come up with that est. of $100 -- NFLX was around $100 when it had 60M subscribers back in 2014-15. D+ has at least that many subscribers currently so it's not wildly out of line to assume it's contributing similarly to the current price.

If not for that high growth "stay at home" part of the Disney business, the stock would have gotten slammed like every other travel and entertainment related company. For an extreme example - take a look at Regal Theaters parent - from $200 pre-covid to $20 today.

 

[New Mouse]

I actually used some quick research (possibly not terribly accurate) to come up with that est. of $100 -- NFLX was around $100 when it had 60M subscribers back in 2014-15. D+ has at least that many subscribers currently so it's not wildly out of line to assume it's contributing similarly to the current price.

If not for that high growth "stay at home" part of the Disney business, the stock would have gotten slammed like every other travel and entertainment related company. For an extreme example - take a look at Regal Theaters parent - from $200 pre-covid to $20 today.

Disney stock price did not jump substantially because of Disney plus so your speculation is completely off.

 

[Brianstl]

I actually used some quick research (possibly not terribly accurate) to come up with that est. of $100 -- NFLX was around $100 when it had 60M subscribers back in 2014-15. D+ has at least that many subscribers currently so it's not wildly out of line to assume it's contributing similarly to the current price.

If not for that high growth "stay at home" part of the Disney business, the stock would have gotten slammed like every other travel and entertainment related company. For an extreme example - take a look at Regal Theaters parent - from $200 pre-covid to $20 today.

It isn't just Disney+ propping up the price of the stock. The film and television library that Disney now owns is unmatched by anyone and is an extremely valuable asset. Disney+ and Hulu both could fail tomorrow (not going to happen) and Disney could go out the next day and reach streaming deals for those properties with other services that would generate massive amounts of revenue. All that content is a goldmine.

 

[Brianstl]

Disney stock price did not jump substantially because of Disney plus so your speculation is completely off.

What are you talking about? Disney stock in early November 2019 was trading in the low 130's and after the annual report came out it shot up to the 150's because of the strong Disney+ numbers in the report. The stock continued to trade consistently in the upper 140's until it became obvious that COVID was going to an issue. Not as big of an issue as it became, but an issue that was going to hurt revenues to some degree. That boost in stock price until that time was because of the results coming from Disney+.

 

[RamblingMad]

What are you talking about? Disney stock in early November 2019 was trading in the low 130's and after the annual report came out it shot up to the 150's because of the strong Disney+ numbers in the report. The stock continued to trade consistently in the upper 140's until it became obvious that COVID was going to an issue. Not as big of an issue as it became, but an issue that was going to hurt revenues to some degree. That boost in stock price until that time was because of the results coming from Disney+.

With the parks and cruise lines mostly shutdown, and cable cutting reducing revenues from ESPN and their other cable networks, Disney+ provides a light at the end of the tunnel. They'll have to turn it profitable at a much faster rate. Right now, they're chopping heads to cut their expense lines. They're going to need to grow their revenue lines as well. I would expect Disney+ to raise prices as soon as it can. The increased subscriber count helped it a ton this year, but next year with stuff still closed, I expect they'll bump up the price. It's way too low compared to its competitors.

 

[RivShore]

It isn't just Disney+ propping up the price of the stock. The film and television library that Disney now owns is unmatched by anyone and is an extremely valuable asset. Disney+ and Hulu both could fail tomorrow (not going to happen) and Disney could go out the next day and reach streaming deals for those properties with other services that would generate massive amounts of revenue. All that content is a goldmine.

Agreed, D+/Hulu is just how they are currently monetizing all those assets.

 

[RivShore]

Disney+ has a long way to go before it becomes NFLX, or even make any money. No way it's suddenly $100 of the $122 stock price. If that were the case, Disney stock should have been worth well over $200 a share before this hit.

Actually I think I might be pretty close. See this article from Jan-2020, pre-pandemic and "stay at home":

https://www.cnbc.com/2020/01/06/dis...worth-over-100-billion-investors-believe.html
It valued the streaming business at $108B (about $60/share) back in January. It's not hard to imagine that it's increased 40% since it already hit 2024 subscriber targets and the increase that all "stay at home" related shares have seen.


And there's this more recent article:
https://www.hollywoodreporter.com/n...ock-price-target-on-strong-streaming-position
Which says things like:
He also noted that "we are decreasing our estimates further to incorporate all the latest headwinds in the 'core' business. And he highlighted: "It is not hard to imagine where the Walt Disney Co.'s stock price would be if they hadn’t undergone such an aggressive and dramatic transformation. Unlike all of their media peers, Disney has now successfully accomplished the difficult pivot of shifting its traditional businesses – and investor attention – towards a broad range of direct-to-consumer (DTC) endeavors. In short order, it is very clear Disney’s DTC businesses have meaningfully outperformed their initial subscriber expectations."

And:
Due to these streaming assets, Disney’s stock price "has decoupled from the usual historical pattern witnessed in prior economic downturns where negative earnings revisions and multiple contraction generate meaningful market under-performance," Nathanson argued. "This time around, the once in a generation, pandemic-driven closure of theme parks and movie theaters plus the acceleration in cord-cutting has been largely ignored as investors gravitate to a sum-of-the-parts valuation approach using Netflix’s price to sales as a valuation comparison for DTC."

Clearly the market thinks the stock would have been meaningfully, if not for straming.

 

[yulilin3]

Just here to bring you the human side of this story
Im at dhs rn, sitting eating a Mickey pretzel, the folks supporting next to me engaged in conversation with the custodial cm.
Guests: i just feel so bad for all of you, not knowing what's going to happen
CM: don't worry about us, you're here to have fun, experience the magic and forget the real world