Parks may be driving Disney toward its next CEO

 

Parks may be driving Disney toward its next CEO

A statue of Mickey Mouse outside of Disneyland

Gary Hershorn/Getty Images

It sounds like Disney adults are having a big say in who will be named the company’s new CEO. Bloomberg reported that theme parks head Josh D’Amaro is the favorite to replace two-term chief Bob Iger thanks to his division’s consistent profitability. His edge comes as parks once again bolstered the Mouse’s middling earnings report, which beat estimates but sent the stock tumbling 7% yesterday.

  • Disney’s experiences unit, which includes parks and cruises, reported a record $10 billion in profit last quarter.
  • Since D’Amaro was placed atop Space Mountain in 2020, the experiences unit has accounted for a majority of the company’s profits. Kalshi gives D’Amaro an 89% chance to do his best Tom Wambsgans and move from parks to the CEO chair when the board votes on a new company leader this week.

Hitting it out of the parks: Total attendance at Disney’s US theme parks only climbed 1% in the most recent quarter, but visitor spending jumped 4% due to concession sales (having a beer at every country in Epcot Center isn’t cheap).

So what’s dragging Disney down?

First, the good news: Operating income in Disney’s streaming division surged 72% from a year ago to $450 million, and the company said it had fewer cancellations (it does not release subscriber totals). However, earnings per share and operating profit declined 7% and 9% year over year, respectively:

  • Nonstreaming entertainment revenue crashed 55%.
  • Sports operating income was down 23%, which can be attributed, in part, to a 15-day standoff with YouTube TV that Disney says cost $110 million in revenue.
  • Disney released nine movies in the quarter compared to four a year ago, which comes with higher production costs.

And Disney warned that parks and cruises growth could slow in the next quarter because of expansion costs, as well as “international visitation headwinds at our domestic parks” from tariffs and potentially stricter visa requirements.

Zoom out: This earnings report represents the challenges that the next CEO will face—how to keep parks and streaming flourishing while managing the expected continued decline of linear TV.

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