The Walt Disney Company recently experienced some turbulence in the stock market when shares tumbled after a disappointing earnings report. As the second quarter earnings report missed expectations, investors began to question the company’s long-term prospects.
The entertainment giant’s stock fell over 9% on Tuesday morning following the release of second-quarter earnings. Despite the report showing revenue growth of 1% to $22 billion, the forward guidance failed to meet investor expectations.
Disney’s earnings before taxes came in at $657 million in Q2, representing a 69% decline from the prior year, which saw $2.1 billion in pretax income during the second quarter. Despite the concerning decrease in this metric, other reported liquidity figures showed promise. Cash flow from operations saw a 13% increase to $3.7 billion, and free cash flow jumped 21% to $2.4 billion year-over-year.
“As we build for the future, the steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content,” CEO Bob Iger noted in the report. “Looking at the renewed strength of all of our businesses this quarter — from Sports, to Entertainment, to Experiences — we believe the stage is now set for significant growth and success, including ample opportunity to increase shareholder returns as our earnings and free cash flow continue to grow.”
Amid the quarterly financial struggle, Disney has also been embroiled in controversy related to the culture war. Reportedly, Disney even disclosed its political and social activism as a “risk factor” to the company’s future performance.
Recently, shareholders have begun revolting against Iger over the woke agenda Disney embraces. A major Disney investor, Nelson Peltz, has vehemently criticized the CEO for the politically charged narratives the company has inserted into its content.
According to Peltz, Disney should be primarily concerned with entertaining its audience rather than pushing a socially conscious message. “People go to watch a movie or a show to be entertained,” Peltz said. “They don’t go to get a message.” He continued, “Why do I have to have a Marvel that’s all women? Not that I have anything against women, but why do I have to do that?”
While Nelson clarified that he was criticizing diversity entirely, he questioned why it had to be so forced in many major titles. “Why can’t I have Marvels that are both?” he added. “Why do I need an all-black cast [like in ‘Black Panther’]?”
Iger has addressed the pervasive concern about Disney’s entertainment offerings prioritizing politics. He emphasized that while the number one goal is to provide entertaining content, the company is actively trying to “reflect” its desired audience.
“I’ve been preaching this for a long time at the company before I left and since I came back that our No. 1 goal is to entertain. I think, like, the term woke is thrown around rather liberally, no pun intended in that regard. I think a lot of people don’t even understand really what it means,” Iger said. “The bottom line is that infusing messaging as a sort of No. 1 priority in our films and TV shows is not what we’re up to. They need to be entertaining.”
However, he explained that Disney is seeking a more diverse reach, stating, “And on one hand, in order to do that, the stories you tell have to really reflect the audience that you’re trying to reach. But that audience, because they are so diverse, really first and foremost, they want to be entertained.” Watch Megan Kelly sound off on Disney for being “woke” below:
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