Walt Disney Company reports Q2 2023 earnings with results slightly down at Walt Disney World vs. Q2 2022

May 10, 2023 in "The Walt Disney Company"

Posted: Wednesday May 10, 2023 4:11pm ET by WDWMAGIC Staff

The Walt Disney Company has today reported its Q2 2023 earnings during a particularly turbulent period for returning CEO Bob Iger. While celebrating its 100th anniversary, Disney is facing pressure from Florida Governor Ron DeSantis on its Walt Disney World theme park operations, coping with a Hollywood writer's strike, and restructuring the company by laying off 7000 employees and cutting costs.

Revenue for Q2 was $21.81 billion, an increase of 13% over the same quarter 2022. For the domestic parks, revenues were $5.57 billion, an increase of 14%.

Domestic year-over-year increases in attendance and per capita spending were 7% and 2% respectively.

"We're pleased with our accomplishments this quarter, including the improved financial performance of our streaming business, which reflect the strategic changes we've been making throughout the company to realign Disney for sustained growth and success," said Robert A. Iger, Chief Executive Officer, The Walt Disney Company. "From movies to television, to sports, news, and our theme parks, we continue to deliver for consumers, while establishing a more efficient, coordinated, and streamlined approach to our operations."

Disney said that results at the domestic parks and resorts were slightly down from the prior-year quarter, as a decrease at Walt Disney World Resort was largely offset by growth at Disneyland Resort. The decrease at Walt Disney World Resort was due to higher costs, partially offset by increased volumes. Higher costs reflected cost inflation, increased expenses associated with new guest offerings and higher depreciation. The increase in volumes was due to attendance growth and higher occupied room nights.

You can view the full earnings report here, and below is the Parks, Experiences, and Products statement.

Disney Parks, Experiences and Products

Disney Parks, Experiences and Products revenues for the quarter increased 17% to $7.8 billion and segment operating income increased 23% to $2.2 billion. Higher operating results for the quarter reflected increases at our international and domestic parks and experiences businesses, partially offset by lower results at our merchandise licensing business.

Higher operating results at our international parks and resorts were due to growth at Shanghai Disney Resort, Disneyland Paris and Hong Kong Disneyland Resort. The increase at Shanghai Disney Resort was due to higher volumes and guest spending growth. Higher volumes were attributable to increased attendance while guest spending growth was due to increases in average ticket prices and food, beverage and merchandise spending. The increase in operating results at Disneyland Paris was due to volume growth, which was attributable to higher attendance, and increased guest spending, partially offset by higher costs. Guest spending growth was due to increases in average ticket prices, average daily hotel room rates and food, beverage and merchandise spending. The increase in costs was primarily due to inflation and higher costs associated with new guest offerings. Higher results at Hong Kong Disneyland Resort reflected more operating days in the current quarter due to COVID-19-related closures in the prior- year quarter.

Operating income growth at our domestic parks and experiences was attributable to an increase at Disney Cruise Line, partially offset by the comparison to a real estate gain in the prior-year quarter. Higher results at Disney Cruise Line were due to an increase in passenger cruise days including the addition of the Disney Wish, which launched in the fourth quarter of the prior year, partially offset by higher costs associated with our ongoing fleet expansion. Results at our domestic parks and resorts were slightly unfavorable to the prior-year quarter, as a decrease at Walt Disney World Resort was largely offset by growth at Disneyland Resort. The decrease at Walt Disney World Resort was due to higher costs, partially offset by increased volumes. Higher costs reflected cost inflation, increased expenses associated with new guest offerings and higher depreciation. The increase in volumes was due to attendance growth and higher occupied room nights. Increased operating income at Disneyland Resort resulted from growth in attendance and guest spending, partially offset by higher costs. Higher guest spending was due to increases in average ticket prices and average daily hotel room rates. The increase in costs was primarily due to higher operations support costs and increased costs associated with new guest offerings.

The decrease in merchandise licensing operating income included lower revenue from merchandise based on Star Wars, Spider-Man, Frozen and Avengers.

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GhostHost1000Jun 03, 2023

I forgot we are the magic.

Jrb1979Jun 03, 2023

You're wrong. Pixie dusters bring their own magic. That's a you problem. Lol.

GhostHost1000Jun 03, 2023

It’s all about the bottom line and shareholders, not their customers other than seeing how little they can give and how much they can charge and get away with it

SirwalterraleighJun 02, 2023

Hey a big shout out to Disney and emperor Bob… After 2 days of optimism and a market wide bump as 500 clowns averted a global economic disaster in DC… DIS closed only $0.14 lower than the price that “forced” them to fire Slaphead 6 months ago 👍🏻

TraumaJun 02, 2023

https://www.ign.com/articles/disney-plus-is-probably-going-to-lose-even-more-content Apologize if this has been posted already.

seascapeJun 02, 2023

The deleted content was purchased from the various studios for use over a certain time frame. Since Disney+ and Hulu no longer want it, they cancelled early and have to pay the studios a portion of the money. The content is now returned to the studios for them to decide what to do with them. The studios are now free to sell the rights to another streaming service or tv service. Given the writers strike it is possible some of the shows could appear on ABC this Fall.

EPCOT-O.G.Jun 02, 2023

Does this mean this content is not just going away in a vault, but rather locked in a box, covered in cement, and dropped in a deep trench in the ocean? Seems more than just not wanting to pay residuals and licensing for a short period of time.

flynnibusJun 02, 2023

I think it's all back to the fiscals that ultimately ran chapek out. They are rearranging all the chairs and trying to establish what the new baseline is... and taking fat write-offs along the way to make the top line numbers look more attractive. They want the annual numbers to show more than what they will achieve in just the last 6months in terms of changing course. Massive write-offs help that... but they are also easy to look past. TLDR - Looks like a massive corporate yard sale to help the annual report to me.

TraumaJun 02, 2023

Well they know better than anyone what attendance and D+ subscriptions are looking like. Maybe they sense trouble on the horizon.

flynnibusJun 02, 2023

I think it shows why they removed what looked like otherwise harmless content... the tax advantage. It wasn't 'storage space' or other non-sense... it was because they could get WAY more value from the write-down then the content itself offered. Seems a bit of a gimmick, but they are really focusing on making the financials look better for q3 and q4

TraumaJun 02, 2023

For anyone who doesn’t speak financials this basically means there is a drastic reduction in the value of the asset. In this case I believe that asset is content. I’m sure I will be corrected immediately if I’m wrong.

DCBakerJun 02, 2023

From a new 8-K filing. Item 2.06 Material Impairments. As previously announced, The Walt Disney Company (together with the subsidiaries through which its various businesses are actually conducted, the “Company”) is in the process of reviewing content, primarily on its direct-to-consumer (“DTC”) services, for alignment with a strategic change in approach to content curation and as a result is removing certain content from its platforms. On May 26, 2023, the Company removed certain produced content from its DTC services. As a result, the Company will record a $1.5 billion impairment charge in its fiscal third quarter financial statements to adjust the carrying value of these content assets to fair value. The Company is continuing its review and currently anticipates additional produced content will be removed from its DTC and other platforms, largely during the remainder of its third fiscal quarter. As a result, the Company currently estimates it may incur further impairment charges of up to approximately $0.4 billion related to produced content. The Company does not expect any material cash expenditures in connection with the impairment charges related to produced content. In addition, the Company may terminate certain license agreements for the right to use content on its platforms, which would result in the removal of licensed content from its platforms and lead to impairment and/or contract termination charges as well as cash payments. The Company currently expects that any such charges and payments related to licensed content would be meaningfully less than the impairment charges related to produced content. Link to the filing below. https://otp.tools.investis.com/clients/us/the_walt_disney_company/SEC/sec-show.aspx?Type=html&FilingId=16706303&CIK=0001744489&Index=10000

EPCOT-O.G.May 19, 2023

Yes. The WB/Batgirl stuff was a bit more unique as that was a pure tax write off that I think they could take advantage of given the M&A aspect. That may require them to memory hole it fully. Other shows getting pulled don’t have that aspect at play. For example, I think WB hinted at licensing out shows to other streamers as a way to recoup more costs externally.

doctornickMay 19, 2023

Or shifting them to something (e.g. digital downloads, being used on a FAST service) where they generate some revenue directly if watched which can cover the residuals costs and make them worthwhile to be offered.