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Disney’s problems are not because recent deals failed
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Disney is just a theme park company
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He has no other good businesses
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It doesn’t look like a new CEO has helped Disney (NYSE: DIS). Not even the anticipation of Josh D’Amaro replacing Bob Iger, who had a failed tenure. Disney shares are down 17% this year, while the S&P 500 is down 5%. If a trend change occurs, it will be in the future, depending on how the stock trades.
D’Amaro’s first week has been described as “very bad.” However, the stock was already falling, meaning “very bad” is not a reasonable description of Disney’s year so far. A week does not make a year.
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Disney was working with OpenAI on a technology called Sora. OpenAI suddenly ended the Sora initiative. Reuters had previously reported that “As part of the three-year deal, Disney said it would invest $1 billion in OpenAI and lend more than 200 of its iconic characters for use in AI-generated short videos.” But the deal was in its early stages, so there was no way to judge whether it would succeed. In other words, how it would affect Disney was a guess.
Then, there was an agreement with Epic Games, known for the success of its Fortnite. Disney invested $1.5 billion in Epic Games in 2024. Writing about D’Amaro’s plans, Fortune said: “The partnership was the cornerstone of his fan engagement mission: a Fortnite-powered Disney metaverse where Marvel heroes and Star Wars villains lived alongside players.” It’s another example of an assumption about the future of a deal.
Disney’s ABC also canceled “The Bachelorette,” which has been on the network for 22 seasons. The reason was accusations of domestic violence against Taylor Frankie Paul, who was going to be the star of the show this season. ABC is part of Disney’s legacy business, which Disney manages as a declining sector. So, it was a loss in a declining sector. How much damage will there be with that?
Disney stock is down because it is a theme park company with no other promising businesses. In the most recent quarter, Disney’s “Experiences” segment results were $10 billion in revenue, which is 40% of the company’s revenue, and $3.3 billion in segment operating income, which is 72% of the total. It was also the only division to see operating income growth during the period.