How are things looking for Disney, the formerly beloved film franchise and entertainment giant that infuriated conservatives and inserted itself into the culture war when it started a fight with Florida Governor Ron DeSantis over his “Parental Rights in Education” bill? Well, revenue has risen, but, according to CEO Bob Iger, it’s looking to “aggressively manage” its costs, which it’s trying to cut by billions of dollars.
Mr. Iger admitted as much on a Wednesday earnings call, saying that Disney, which in February announced that it wanted to cut costs by $5.5 billion across the company, is now intent of slashing costs by billions more, now by $7.5 billion total.
Mr. Iger claimed, during the call, that Disney is now “on track” to achieve the new savings goal. He further added that Disney has engaged in “restructuring” which “has enabled tremendous efficiency” at the House of Mouse. “Restructuring” there means, among other things, thousands of employees laid off.
While the need to cut costs could mean that conservative fury forced the company somewhat on its backfoot, the more prosaic explanation is that Disney is simply trying to limit its expenditures heading into what looks like a recession, which would be financially prudent.
Further, the earnings news for Disney was quite good. While analysts expected Disney’s earnings per share to be, on average, 69 cents, it beat that by a substantial margin and managed to earn a whopping 82 cents a share, as announced on the earnings call. That represents both cut costs and growing revenue, as the company’s revenue grew about five and a half percent from $21.2 billion to $21.4 billion, Even more impressively, its income hit $246 million, which is a massive 62.9 percent increase.
Commenting on the results, Mr. Iger said, “Our results this quarter are a testament to the work we’ve done across the company this past year. And I’m bullish about the opportunities we have to create lasting growth and shareholder value and to strengthen Disney’s position as the world’s leading entertainment company.”
One major change Mr. Iger announced on the call is that Disney will be moving away from series and toward films, which he thinks will both help the company control costs, which are massive for content, and help it invest in good content rather than producing a lot of generally disappointing content.
He said that the new focus “gives us the ability to dial back a bit on some of the spending and investment in series. And that blend of spending between films and series, we believe gives us an opportunity to increase our margins and grow the business.”
Adding a bit more context to that aspect of the plan, Disney’s Kevin Lansberry noted that Disney is now targeting an “annualized entertainment cash content spend reduction target” of $4.5 billion, excluding the impact of the SAG-AFTRA strikes on the bottom line. However, he also noted that those slahsed costs will “take a few years for the bulk of the savings to be reflected in the P&L due to the timing of amortization.”
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