Disney is hurting for cash

[TommyJK]

Disney Cash on Hand was $14.3 B as of March 31st (up from $5.42 B in 2019).

It will be very interesting to see what they report shortly for Q2 that just ended.....

 

[CastAStone]

This post is complete conjecture and nonsense.

Wall Street average estimates for the Quarter from April 1 - June 30 is a $1bn loss.

Disney had $14bn cash on hand on March 31st.

The end.

 

[rteetz]

Disney Cash on Hand was $14.3 B as of March 31st (up from $5.42 B in 2019).

It will be very interesting to see what they report shortly for Q2 that just ended.....

Report comes August 5th

 

[mwoody19671967]

Two business models of thoughts when times are tough. 1. Cut, cut, cut, and cut some more. Limit new experiences. Pair down staff and do the bare minimum to survive. The thought is "we are here" so people will come. 2. Strategically limit your cost cutting and rather focus on Service! Go above and beyond for the customer and give them a magical experience--Under Promise and Over Deliver. The easy choice is 1. The smarter choice is 2.

 

[SaintsManiac]

WDWPro is hurting for attention...

 

[Vern60]

I read somewhere once the opinion that WDW was really a hotel business, vs a theme park business. If nothing else it's an interesting perspective to consider. I know covid is going to limit attendance but I can't help but feel the ongoing deterioration of the advantages to staying onsite could really hurt their business in the long run.
The timing of covid was also absolutely horrible for Disney, (at least in my opinion), with a large percentage of Epcot in total disarray, and so many other projects only half completed, not to mention the loss of any expected return from the huge star wars investment, ugh. Just glad none of the decisions are mine to make - I guess that's why they make the big bucks.

 

[Fido Chuckwagon]

4. Disney World having to close again would be devastating.

DIsney World refusing to close as deaths begin to spike and then continue to spike may also be devastating.

 

[CastAStone]

I read somewhere once the opinion that WDW was really a hotel business, vs a theme park business. If nothing else it's an interesting perspective to consider. I know covid is going to limit attendance but I can't help but feel the ongoing deterioration of the advantages to staying onsite could really hurt their business in the long run.

This is not as true as some people insinuate but is true enough that they have to make big picture decisions off of it. Why has paid fastpass taken so long to roll out at WDW when every other Disney park in the world has some version of it? My understanding from insiders is that it's because while the Theme Parks team is jazzed about the revenue the hotel side needs to ensure that there is enough incentive to stay on site (and to buy $30,000 contracts to stay on site forever).

I think whatever they're taking away from the on-site experience now should be considered temporary. Some of the changes to the parks and future plans will likely be more permanent (and some wont be).

 

[Marthasor]

Two business models of thoughts when times are tough. 1. Cut, cut, cut, and cut some more. Limit new experiences. Pair down staff and do the bare minimum to survive. The thought is "we are here" so people will come. 2. Strategically limit your cost cutting and rather focus on Service! Go above and beyond for the customer and give them a magical experience--Under Promise and Over Deliver. The easy choice is 1. The smarter choice is 2.

As a shareholder in the current circumstances, I vote for #1. The problem with WDW isn't that people don't want to go. The problem is people, literally, can't travel there. States with travel restrictions, schools and employers forcing people to quarantine if they go and the international market (particularly Brazil, Australia and the UK) completely cut off from traveling to Orlando are going to make a huge impact on their revenue (or lack thereof). There is zero reason to invest in new rides or experiences and try to incentivize people to travel to enjoy them if they have no way to travel there. It's the same reason Mulan keeps getting pushed back. No point in releasing it into theaters when you know you, literally, will have no audience to see it. WDW's summer revenue has already been crushed. When school starts and guests from drive-in states aren't going, it's going to get worse.

 

[Drfate102]

This post is complete conjecture and nonsense.

Wall Street average estimates for the Quarter from April 1 - June 30 is a $1bn loss.

Disney had $14bn cash on hand on March 31st.

The end.

The Income Statement and Statement of Cash Flows are two different things. Any project that is going to be Capitalized is money going out the door without affecting the bottom line, same is true for any prepaid assets that are to be amortized over a period of time. In addition to that, any liabilities that are amortized, such as annual Disney + subscriptions, will have revenue recognized but the positive cash flow will have been at a earlier date. So while yes, they are expected to post a loss of around $1B, their negative Cash Flow can be much greater.

 

[PaladinButters]

8. 50th celebration is essentially canceled down to only things that cost little... no new floats, no big refurbs.

Ok I know this is all speculation at this point but.... number 8 there just hurt me deep in the inside feeling places!

 

[CastAStone]

The Income Statement and Statement of Cash Flows are two different things. Any project that is going to be Capitalized is money going out the door without affecting the bottom line, same is true for any prepaid assets that are to be amortized over a period of time. In addition to that, any liabilities that are amortized, such as annual Disney + subscriptions, will have revenue recognized but the positive cash flow will have been at a earlier date. So while yes, they are expected to post a loss of around $1B, their negative Cash Flow can be much greater.

Understood but I expect that the opposite is true, with no movie or tv studio production, virtually no park construction, and 20 years of projects still depreciating and amortizing. What would they have been spending money on besides salaries?

 

[Eric Smith]

DIsney World refusing to close as deaths begin to spike and then continue to spike may also be devastating.

I don’t think it will be. Americans won’t care....we obviously don’t care about anything that is going on. Also, people have very short memories.

 

[allmousedup]

I am not sure Disney's cash is the problem. A key difference between now and 2008 is the banking system has not approached freezing and lending lines are as strong as ever. Disney had $15B on their balance sheet but likely many times that in potential leverage. There was a point in March where we were all holding our breath but the governmental level of support really answered any questions on the financial system. I do think the recovery is going to be slow and Disney will cut back on many projects as they service a new debt load and fight to make Wall Street expectations, but I would have a tough time believing they would get into a severe (potential bankruptcy type) cash situation. As to the internal disagreements mentioned, I have no doubt those are happening - they happen in every company and the more creative - the more disagreements. The key to a good company is having the processes and systems to resolve the disagreements not stifle them before they happen - it has always appeared Disney has the structure and culture to deal with these, maybe we'll get the chance to see how this continues under the new regime...

 

[Wreckem]

The tourist industry as a whole will take a while to recover from 4 months of ZERO business -- and potentially 6+ more months of severely REDUCED business. It's a shame since all it seems the lockdown did was wreck the economy and just delay the inevitable rise in spikes. Disney could have just been closed for the originally planned 2-3 weeks, gotten ready to do this social distancing and mask thing and opened in April ...

1) Not shocking - if the parks are going to have severe less attendance for at least a year (or more) . .there is no reason to "attract" people to Epcot for a while.

2) Also expected -- if several of the hotels are going to be closed for a while, that alone means a lot of cast members that maybe have been repurposed for now for cleaning aren't going to last long once the extra cleaning is seen as not needed as much.

3) You mean like Tron and Ratatouille?

4) And for that reason it is not going to close again. Nothing should at this point -- the virus is here .. it's inevitable. Even closing down for 3 months didn't "stop" it .. so why close down again.

5) No comment

6) I think we are already seeing cost cutting measures .. which for now .. can be "in the name of safety" .. like no college program, no luggage delivery, announcement of no free magic bands soon .. etc. etc. Some rides may go "seasonal".

7) Not sure anyone can be a fall guy -- this situation is no one's fault

8) I can't see them putting money in the celebration .. they may not need to .. people will be itching for WDW without anything "special" since a lot of people will have not gon for a year or two because of the virus ... but just use it as an advertising gimmick to get people to show up.


Personally I feel that some of the nice Disney customer service will be lost as disney cuts staff .. which makes "magical moments" less likely to happen. Plus .. I am sure some staff will just be grumpier because of having to wear a mask all day, working in a stressful environment (where they may be afraid for their health) or having to work harder because staff has been cut.

Reduced staff means a lot more "self-service" options --- we were already seeing it with self check-in and mobile ordering. I'll be sad if I go into a Disney hotel lobby and there is like only one person at the check-in desk .. no special activities at resorts .. etc.

If we did what we were supposed to have done like Europe and most of the rest of the world we would not be in the situation we are in. This was not inevitable if you look at the other countries that got their response right. The US screwed up severely. I REPEAT this was NOT INEVITABLE. Stop spreading that out right lie. And whether you want to or not it’s likely the only way to stop this in several states is to have another lockdown. What happened in March and April in New York is going to be repeating itself in at least half a dozen states. We are likely to see a new record daily death toll by Labor Day.

We wasted the shutdown. Which for most places that are massively suffering was only 1 month not three. Now we are paying for it.

If we continue on the path we are. The economy will crater as the death toll gets out of control. Lockdown or not. Texas’ economy is already starting to grind to a halt and we have had two straight weeks of increases in unemployment.

 

[Orion Nebula]

Not surprised at all. Disney right now could potentially charge more at Disney world without offering anything more. Once fireworks and shows start up again I can really see them doing that to get money flowing. The cash cows will always show up.

Your right, people would max out the capacity even if they only allowed parking lot visists. lol

 

[Jrb1979]

Understood but I expect that the opposite is true, with no movie or tv studio production, virtually no park construction, and 20 years of projects still depreciating and amortizing. What would they have been spending money on besides salaries?

Either way a lot of projects will most likely be cancelled or delayed for awhile. I don't think Disney or Universal will see high attendance again for a long while. I don't think many people will be traveling much for awhile as many won't have the money to. With the rumor that many AP holders no showed yesterday it's already starting.

The regional parks will end coming out the best at the end of this. More families will go to their local park over paying for a Disney or Universal vacation.

 

[CastAStone]

Either way a lot of projects will most likely be cancelled or delayed for awhile. I don't think Disney or Universal will see high attendance again for a long while. I don't think many people will be traveling much for awhile as many won't have the money to. With the rumor that many AP holders no showed yesterday it's already starting.

The regional parks will end coming out the best at the end of this. More families will go to their local park over paying for a Disney or Universal vacation.

As to the first part, of course they will cancel and delay projects. But WDWPro's post is 700+ words of conjecture, blather, and nonsense followed by some numbered things, some of which he has heard and are probably true, some of which he probably heard and the person telling him is making their own conjectures, and some of which he is conjecturing himself. I mean the idea that we would know if Iger was setting up Chapek to be the fall guy is laughable.

As to the second part, that will be true only if the local parks are as zealous about mask mandates as WDW/Universal. The local parks also have the advantage that for most of them 90%+ of their attractions are outdoors. For Disney and Universal that percentage is rather small.

 

[adam.adbe]

I mean the idea that we would know if Iger was setting up Chapek to be the fall guy is laughable.

You mean he didn't email 30 of his most trusted lieutenants, a handful of middle managers, and a WDW bus driver a carefully worded "I'm gonna sink Chapek!"?

My source is useless I tell ya.

 

[Dsny4fun]

DIsney World refusing to close as deaths begin to spike and then continue to spike may also be devastating.

Have you ever once posted something positive?? Ever ???