Sep 19, 2023 - Economy

Disney to double investment in theme parks and cruises over next decade

Disney net earnings, by sector
Data: Disney earnings reports; Chart: Axios Visuals

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.

Go deeper: Disney dilemma underscores media's existential crisis

Go deeper