Disney to double investment in theme parks and cruises over next decade
Disney plans to nearly double its investments in its popular theme parks and cruise line, the company said in a securities filing Tuesday.
Why it matters: Profits from theme parks have helped offset Disney's streaming losses for years.
- Disney's parks segment suffered dramatically during the height of the COVID-19 pandemic, but made a strong comeback after lockdowns were lifted.
Details: The company will spend roughly $60 billion in the next 10 years on its parks and cruise line segments, nearly doubling the investment it's made in those areas in the past 10 years.
- Those investments will be used to advance its storytelling capabilities, expand its parks, resorts and cruise line, and reach new fans, the company noted in a presentation to investors.
- Disney pointed out that strong historical investments in its intellectual property have helped to consistently grow revenues at its parks, experiences and resorts segment.
- It highlighted the strength of its investments over the past 20 years in franchises such as "Star Wars," "Toy Story" and "Cars."
Between the lines: Disney's parks, experiences and products revenues last quarter increased 13%, but that was mostly thanks to increased results at its international parks and resorts.
- A decrease in attendance at Walt Disney World Resort in Florida last quarter, coupled with higher costs, resulted in lower operating income from the company's domestic parks.
- The company remains embroiled in a protracted political spat with Florida Gov. Ron DeSantis.
- It canceled plans for a new, nearly $1 billion employee campus in Orlando in May, citing "changing business conditions."
The big picture: Disney and other Hollywood giants are under enormous pressure to streamline their focus and make their streaming businesses profitable.
- Disney CEO Bob Iger said in July the company is considering selling off its linear TV assets as it looks to prioritize parks, streaming and movies.
- Broadcast and cable networks have struggled with major viewership declines as cord-cutting intensifies.
What to watch: Investors reacted mildly to the news, sending Disney's stock down 3% Tuesday after the announcement.
- Shares in Disney are down nearly 8% year-to-date. The company's stock has declined nearly 60% from its all-time high in March 2021, when Disney+ subscriber growth drove short-term investor optimism.