Walt Disney Co, the American multinational mass media and entertainment conglomerate, has suffered a decline in its share…
Walt Disney Co, the American multinational mass media and entertainment conglomerate, has suffered a decline in its share value during extended trading. This follows a decrease in subscribers to its streaming service and a projected wider loss in that division for the current quarter.
Disney stock which has continued on its downward spiral, is trading at $92.18, after opening the day at 94.80 and hitting a daily high of $95.11 and daily low of 92.08. This represents a decline of about 8.84%. BBC reported that the flagship streaming service witnessed a loss of 4 million subscribers in the first quarter, amid a wider cost-cutting drive. However, Disney+ managed to reduce its losses by $400 million (£316.5 million) during the same period.
This development comes as the streaming business reduced its operating losses to $659m for the first three months of 2023. This figure was notably lower than the projected $850.3 million by analysts, and less than half of the losses recorded just two quarters prior.
The company’s streaming division, Disney+, is also expected to incur a loss of $100 million this quarter due to shifts in marketing expenditures, especially as the company is simultaneously seeing a sharp decline in its traditional TV business, which includes ABC and ESPN.
The streaming platform has also witnessed consecutive decline in subscribers for the second quarter. This is coming nine months after Disney won the streaming war with over 221 million subscribers against Netflix.
However, as a result of the ongoing financial chaos, the company has made the decision to remove films and TV shows from its services as a cost-cutting measure. This, in itself, is expected to incur charges and penalties of up to $1.8 billion.
Read Also: With 221 million subscribers, Disney is leading Netflix in the race for subscribers
Disney in financial strain despite Iger’s comeback
In November 2022, Disney’s Chief Executive Officer, Robert (Bob) Iger returned from retirement to address the challenges faced by the company amidst the significant disruptions in the tech industry and beyond.
Despite implementing strategic measures to improve financial performance, including the introduction of an ad-supported tier for Disney+ and a price increase for the ad-free version, the company experienced a decline in paid subscriptions.
The number of subscriptions reached 157.8 million, falling short of analysts’ expectations of 163.1 million, despite revenue-boosting efforts. Additionally, earlier this year, the company announced plans to reduce its workforce by 7,000 jobs.
However, the company’s theme parks continued to attract visitors, with growth observed at Shanghai Disney Resort, Disneyland Paris, and Hong Kong Disneyland Resort. Together, they contributed to a 23% increase in operating income at the unit, totaling $2.2 billion compared to the previous year.
To further make the company more profitable, it is looking to make Hulu content available within Disney+ offering a one-app experience that incorporates all of its content via Disney+. Although it is important to note, this latest announcement comes after thousands of Hollywood TV and movie screenwriters held their first strike in 15 years early this month.
The previous writers’ strike took place in 2007 and lasted for 100 days, resulting in an estimated cost of $2 billion for the industry. Considering the potential impact of this strike on the company’s financial performance, it remains uncertain how long it will persist and how much it will cost the company this time around.
Read Also: Disney+ to lay off 7,000 employees after losing 2.8 million subscribers