Disney is hurting for cash

[anthony2k7]

You can, you just have to buy another ticket, according to Disney, anyway.

I joked that disney should off APs a discount on walk up day tickets. I forgot joking about such things with disney is a bad idea. So instead of discount they went with credit instead. Close. So very disney though.

 

[ParrotBill]

"Hurting for cash" has several levels. I work in a company that went through Chapter 11. First, you have managing for each quarter's results. This is often the reason for sudden changes - delays, cancellations, cutbacks, etc. They want to minimize the variance of actuals vs. guidance to avoid a stockholder confidence issue. These can seem severe in a company that hasn't had any serious financial issues before.

There is also managing to long term outlook to avoid having to file an "ongoing concern" if there isn't enough cash to operate for 12 months ahead. As noted earlier in responses, that doesn't seem to be a threat although 6 months from now, if they can't drive revenues back to near normal for parks and movies, perhaps we'll see bigger restructuring to reduce losses and conserve cash. The third is when there isn't enough cash to pay debt service, payroll and other costs... Disney is nowhere near that level of concern! And many of Disney's businesses are compartmentalized in separate legal entities to help manage financial reporting and handle issues if they occur.

 

[jkh36619]

I have to imagine that not having any MCU movies is a kick in the groin right now. Those flicks print money.

 

[kbelle8995]

If they are hurting they might think about treating their AP people better. I've been getting the runaround about my postponment since June 11. 2020. Disney told me saturday that I hadn't contacted them regarding my pass. Plus I don't think they are going to get out of state or international parks for awhile.

Not to mention the movies, they cannot get out, since most theaters are closed.

 

[PaulaSB12]

With Hong Kong closing and the high rate of covid in Florida will Disney be re closed?

 

[Eric Smith]

With Hong Kong closing and the high rate of covid in Florida will Disney be re closed?

No, part of why they kept WDW closed for as long as they did was to put measures in place to make sure they don't have to re-close the parks. I don't think you can apply anything that happens with Hong Kong to WDW. Keep in mind, Shanghai is still open.

 

[TommyJK]

No, part of why they kept WDW closed for as long as they did was to put measures in place to make sure they don't have to re-close the parks. I don't think you can apply anything that happens with Hong Kong to WDW. Keep in mind, Shanghai is still open.

I'm not that confident.

If hospitals in Florida get over-run (which they are on the brink of becoming) there very well could be a mandate to have businesses start closing their doors again. Or conversely if public pressure/sentiment gets loud enough, Disney could decide to close again (if they feel it will be better for long term business).

 

[gatour]

"Hurting for cash" has several levels. I work in a company that went through Chapter 11. First, you have managing for each quarter's results. This is often the reason for sudden changes - delays, cancellations, cutbacks, etc. They want to minimize the variance of actuals vs. guidance to avoid a stockholder confidence issue. These can seem severe in a company that hasn't had any serious financial issues before.

There is also managing to long term outlook to avoid having to file an "ongoing concern" if there isn't enough cash to operate for 12 months ahead. As noted earlier in responses, that doesn't seem to be a threat although 6 months from now, if they can't drive revenues back to near normal for parks and movies, perhaps we'll see bigger restructuring to reduce losses and conserve cash. The third is when there isn't enough cash to pay debt service, payroll and other costs... Disney is nowhere near that level of concern! And many of Disney's businesses are compartmentalized in separate legal entities to help manage financial reporting and handle issues if they occur.

On Friday, Carnival announced their quarterlies. In the announcement, even without ANY incoming revenue, they can survive until the end of 2021.

However Disney has incoming revenue. ESPN cable fees that are charged to the cable companies are the highest for any cable channel. Something like $6-$7 per cable subscriber. While ESPN is taking hit on the advertising side they are making revenue. While ABC is also taking a hit on advertising they are still taking in revenue.

In both cases, they can normalize the advertising loss by spreading out the "make-up" advertising. Basically if a television add buy doesn't reach the ratings goal for a particular program, instead of paying cash back to the advertiser they will do additional ads gratis in the future.

Also movies in the "can" that were scheduled to be released in the last few months but haven't been shown are still fresh. Once things normalize they can release those movies. For most movies they are not "dated". While they work through the backlog of unreleased movies, the studios can gear production of movies already in the pipeline.

Will things be a bit rough along with cost-cutting, yes. But it probably won't be dire unless things go south of the great recession into Great Depression territory.

 

[Ben E N]

With Hong Kong closing and the high rate of covid in Florida will Disney be re closed?

That was due to the government scaling things back. I do not foresee the federal government in the US, or the state government in Florida wanting to close down theme parks when they are both pushing for schools to open up.

 

[OSUZorba]

That was due to the government scaling things back. I do not foresee the federal government in the US, or the state government in Florida wanting to close down theme parks when they are both pushing for schools to open up.

I love theme parks. But schools being open is about 100 times more important than theme parks, both for the future and present economy and mental health.

 

[Ben E N]

I love theme parks. But schools being open is about 100 times more important than theme parks, both for the future and present economy and mental health.

I fully agree. I put them right below fire and police departments and hospitals in terms of how important they are to their communities. But as long as Disney and other theme parks stay well below capacity limits, they will not have nearly the same person per square foot as what schools will have in the best of circumstances.

 

[RivShore]

Some big growth numbers for Dis+ from GS:

https://finance.yahoo.com/news/street-underestimating-disney-potential-says-154409137.html?.tsrc=rss

 

[MonkeyKnifeFight]

I'm not that confident.

If hospitals in Florida get over-run (which they are on the brink of becoming) there very well could be a mandate to have businesses start closing their doors again. Or conversely if public pressure/sentiment gets loud enough, Disney could decide to close again (if they feel it will be better for long term business).

are they though? After the last week of 70,000 more positive tests that only translated to 130 more people in the ICU across Florida. People seem to be going in and out of the hospitals much more quickly than in March and April.

 

[Michelleybelle]

Spending is continuing in spite of depression-like revenues projected for the remainder of the year... and often on new projects of a social nature (changes are coming to Hall of Presidents, Jungle Cruise, Country Bears, Pirates of the Carribean, Carousel of Progress, etc).

This post seems like a whole lot of words designed to disguise the fact that you don't like the idea of changes "of a social nature."

 

[Jiminy76]

This post seems like a whole lot of words designed to disguise the fact that you don't like the idea of changes "of a social nature."

Um... perhaps you should re-read the posters initial post as he is re-posting a post from WDWPro on another site before attacking him for not liking changes “of a social nature”.

 

[jkh36619]

Um... perhaps you should re-read the posters initial post as he is re-posting a post from WDWPro on another site before attacking him for not liking changes “of a social nature”.

Seriously... Some people just want to hate.

 

[RamblingMad]

Disney can raise cash by selling bonds or equity. I don't see them failing. What I don't know is how long they can keep WDW open with the cases going through the roof. CA essentially shut back down again today.

 

[bookwormde]

Disney can raise cash by selling bonds or equity. I don't see them failing. What I don't know is how long they can keep WDW open with the cases going through the roof. CA essentially shut back down again today.

Yes but the window to access these resources can be limited, at least at historic levels. if ongoing concern issue were to became apparent before this option is used then the window for practical purposes closes

 

[wdwoutsider]

No one on earth thinks disney will "fail". Running low or out of cash and going under are two totally different things.

Disney has lots of things it can sell for more cash. The question is how quickly is Disney burning thru it's cash. I think much faster than wall street knows. We all expect the Q2 call to be terrible, how bad we will find out in less than a month. Q3 call though i think will really show these limited numbers of guests are not helping much either and cash burn has continued and much steeper than wall street wants to hear. Cast members and other costs are so much compared to revenue. They don't have the once in a lifetime international families buying every bell and whistle you have lots of season pass holders and super fans who now how to save money. DVC members, super fans, and season pass holders all know how to save and what isn't a good deal. Disney thrives off of the big spenders. Q3 call i think they won't be able to spin these general statements as the cash burn and loses will tell the full story.

Disney still won't say what percentage capacity WDW is needed for profitability, wall street will want to know more as this goes on longer. That question will come up on the Q2 call again. They asked it twice on Q1 as its really important to see how much money disney will really burn thru. The longer this goes on for, the more that is a really important question. In early May i think we all assumed we would be in a much better place come July/August. I am sure disney is preparing answers as they had ready last call, but the analysts will try maybe in a less direct way.

Disney plus is awesome, its great, its a huge success. It won't actually cover its own costs for 3-5 years still. It's also super small for Disney compared to film revenue and park revenue. Disney plus is a huge success but years away from actually being profitable and it could lose alot of members if they dont keep adding new content(which is expensive). Look for Disney to try to focus on Disney Plus and take up time, but the analysts questions to zone in on parks and cruises.

Basically disney will weather this storm, but its cash situation is definitely one to watch. Q2 and Q3 calls will be must dial in events.

 

[Eric Smith]

This post seems like a whole lot of words designed to disguise the fact that you don't like the idea of changes "of a social nature."

I agree with this. The only other rides I've seen discussions about being changed are Peter Pan, Jungle Cruise and Country Bears and those changes are much more limited than what will be taking place with Splash Mountain. I haven't seen any discussion about CoP or Hall of Presidents.