The company is starting off its 100th anniversary by cutting more than $5 billion in costs, and by laying off 4 percent of its global workforce. Seems like the company is more in survival mode than creativity mode. As Disney goes through the turmoil, the steady growth at theme parks will come into even greater focus.
Walt Disney Corporation CEO Bob Iger is optimistic about the future of Disney theme parks, even as he announced his company was cutting 7,000 jobs from its workforce, reorganizing and slashing $5.5 billion in costs during Wednesday’s first quarter earnings call.
Disney executives are reorganizing to bring a more “cost-effective coordinated and streamlined approach to our operations,” Iger said. Within the $5.5 billion cost cut, $3 billion will come from content and $2.5 billion from non-content. It was not clear at this point how much of that would come from the theme parks and experiences division.
It was Iger’s first earnings call since returning to the top executive spot and starts off Disney’s 100 year anniversary. The company will reorganize under three segments: Disney Entertainment, ESPN and Disney Parks, Experiences and Products.
Under the restructuring, Josh D’Amaro will remain the chairman of Disney Parks, Experiences and Products Chairman. At Skift Global Forum, D’Amaro said he wants to merge the digital and physical world seamlessly at Disney theme parks and attractions with next generation storytelling.
The parks and experiences division reported an increase of 21 percent year over year to $8.7 billion and segment operating income increased 25 percent year over year to $3.1 billion in the first quarter.
Domestic demand and guest spending contributed more to operating income growth than the international side. The stronger domestic demand was thanks to the longer passenger cruise days, attendance and occupied room nights. The Genie+ and Lighting Lane pushed an increase in guest spending growth.
Quarter-to-date domestic park attendance at Disney World and Disneyland Resort are pacing above the prior year and will likely continue, according to chief financial officer Christine McCarthy.
The international side got a boost from demand growth at Disneyland Paris and higher royalties from Tokyo Disney Resort, which was partially offset by Shanghai Disney Resort’s weaker performance due to month-long Covid-19 closures at the park in the quarter.
Iger said he is “very, very bullish” about Disney theme parks and pointed to strong demand. Moving forward, he said the company will continue to “manage capacity very, very carefully” and “creatively” in order to preserve the guest experience.
When Iger took over, he brought in a new pricing strategy that made parks more accessible and cost-flexible to avoid alienating consumers. The company has made its tickets available at lower prices for longer periods of time.
Revenue for the company’s first quarter amounted to $23.5 billion, up 8 percent year over year. Total segment operating income was $3 billion, up 5 percent year over year.
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Photo credit: Disney's first quarter earnings for the 2023 fiscal year. Brian McGowan / Unsplash