Disney (DIS) Has Forgotten How To Make Movies, But Sure Is Good At Spending Money on Them

24/7 Wall St. Key Points:

• Walt Disney Co. (NYSE: DIS) is under pressure after its $200 million live-action Snow White film flopped at the box office, raising concerns over creative strategy and brand dilution.
• Slowing international tourism, particularly from Canada and Europe, is likely to hurt Disney’s theme park revenue as high travel costs and geopolitical tension deter foreign visitors.
• Disney’s streaming business remains unprofitable and lags major competitors like Netflix (NASDAQ: NFLX), while park pricing and declining content quality further weigh on sentiment.
• If you’re worried about the recent pullback in stocks, it’s time to check with a financial advisor and see if you’re ahead, or behind on your retirement goals. Click here to speak with someone today and see where you stand. Don’t worry, it’s free.

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Transcript:

[00:00:04] Doug McIntyre: So our friends at Disney make a huge amount of money on their animated film brands. They did? Well, they used to. Right. And the way that it worked was, is that it used to be true animation. Yeah. And it’s now this sort of animation where they take this, I don’t even know how it works, but there are really humans in it, but sort of a cartoon with humans in it.

[00:00:31] Doug McIntyre: Right, right. The latest one was Snow White. Now there was about a lot of controversy about. Snow White. I think one had to do with what the actress looked like. people in the in dwarves said that, that there was dwarf, what they called dwarfism in the movie. They, the dwarves were being presented in an unfavorable light, but okay, look, they released the movie, right?

[00:01:00] Doug McIntyre: And it’s a bomb.

[00:01:02] Lee Jackson: Totally bombed, and then she’s out there, 2021 spouting all this pro Hamas, and, just the timing was horribly bad. And the film apparently is horribly bad. And I don’t, I think a lot of parents, especially the millennials or maybe, younger Gen X, they, remember the old, cartoon sort of animation for Snow White from 1937 or whatever it was, and they loved it. And for it to get, stabbed in the back like this. I think a lot of people don’t like that, especially moms.

[00:01:36] Doug McIntyre: Well, there are two things that are interesting here. when you look at lists of movie, revenue, they’ll show it in constant dollars.

[00:01:44] Lee Jackson: Yeah.

[00:01:46] Doug McIntyre: Snow White in the Seven Dwarves is number 10 in history. Uhoh, this one did 45 million, which means it’s like in history, probably 5 million. That’s nothing. But it costs $200 million to make. Yeah.

[00:02:00] Lee Jackson: Right.

[00:02:00] Doug McIntyre: So if you’re a Disney investor and you’re looking at this, you gotta say to Bob Iger, who’s the CEO over there right now?

[00:02:08] Doug McIntyre: What were you guys thinking? You spent $200 million on one of these animated films, and what you come up with is you come up with somebody that nobody goes to. And the problem was, is that the formula had been working for them. Okay?

[00:02:24] Lee Jackson: Oh God, yes. I mean, I mean, I’m surely you got trapped on some flight and saw the Lion King, which was good.

[00:02:30] Lee Jackson: And some of these other, strict an and the animation’s incredible. And the film did great,

[00:02:38] Doug McIntyre: well, listen, it adds to all of Disney’s other problems. people love the fact that they made it a dime on their streaming business, which is still, fourth or fifth among all the streaming companies.

[00:02:52] Doug McIntyre: Yep. While Netflix is burying everybody else, Disney’s barely moving forward. And the other thing people don’t like about Disney is, that people are worried that the theme parks are priced, out of what a middle class person can pay if they take. No, two, a couple with three kids. it’s, yeah, it’s absolutely Any

[00:03:15] Lee Jackson: rates alone, just for a daytime ticket are like over a hundred dollars I think in some of the venues.

[00:03:22] Lee Jackson: And you’re right, if you’re a mom and a dad, even if you’re making decent money between the two of you, you’re looking at, between, especially if you got a fly to Florida or fly to California or fly to one of them, you’re talking 10 grand.

[00:03:37] Doug McIntyre: Okay. So here’s something that people may have caught onto.

[00:03:41] Doug McIntyre: I just pulled up the Disney chart. Okay. Disney’s down two and a half percent today. Maybe people are catching onto this, but I’m gonna tell everybody something. The number of tourists coming to the United States from any place else in the world has nose down, air traffic between Canada and the United States down 70%.

[00:04:04] Lee Jackson: Yeah. It’s down a bunch.

[00:04:05] Doug McIntyre: If you’re coming to the United States to go to one of the two big Disney theme parks from outside the United States, you watch the traffic to those places drop off.

[00:04:14] Doug McIntyre: Those aren’t just domestic destinations. Okay. Yeah. People are flying into LA or into Orlando to see those, so, right.

[00:04:22] Doug McIntyre: The people are worried about the theme park revenue because of, what it costs to get in, add to that, that a bunch of people aren’t just going to, they’re not gonna fly the United States.

[00:04:33] Lee Jackson: No. at least not, yeah. At least not until some of this, banter back and forth about Terrace as a result.

[00:04:40] Lee Jackson: But yeah, it could be a long summer for the theme parks unless they decide it’s time to discount.

[00:04:46] Doug McIntyre: Even if they do, you’re not gonna get a German to get on a plane if they’re afraid of how they get treated when they land in the United States. I don’t, I think one of the problems is you can’t discount it enough to get certain people from overseas to come to the United States.

[00:05:02] Doug McIntyre: As you said, they wanna see how this washes out.

[00:05:05] Doug McIntyre: Who’s on the list of people that the government can harass, take, give a problem till they have to leave the United States? You don’t have the right paperwork. It’s so complicated. Right now I don’t like Disney.

[00:05:19] Doug McIntyre: It’s not because of Snow White. Okay. It’s not because of streaming. It’s because what’s going on between the United States and really the west rest of the world is gonna drop tourism in the United States significantly.

[00:05:34] Lee Jackson: Yeah. And that’ll be a short, probably a more of a short term issue, because I mean, Trump doesn’t want this to drag on forever and basically as we’ve seen already, he’s just looking for concessions, from these other countries because the, their, tariffs on, our goods are much higher.

[00:05:52] Lee Jackson: And that’s, it is what it is and people always wanted to deal with it. And Obama said he was gonna deal with it and, Bush said he was gonna deal with it. Nobody dealt with it. It’ll probably work itself out in the shorter term, but yeah, it, you can Sure bet it could have a big effect this summer.

[00:06:11] Doug McIntyre: Yeah. Whatever quarter we’re gonna go into in the next month or so. And I don’t think Disney has a calendar quarter. I think they run it on, it. A non calendar fiscal, but

[00:06:23] Lee Jackson: yeah, I think it is. Leaving that aside, the quarter that we’re about to start is not going to be a good quarter for

[00:06:31] Lee Jackson: this.

[00:06:31] Doug McIntyre: No, it could be.

[00:06:33] Doug McIntyre: Your argument is, by the dip. Okay. Your argument is you’re gonna have bad earnings in that quarter. The stock may dip some, but the, issue about tariffs is gonna resolve itself. The issue about how people from overseas are treated in the United States or their anxieties will be behind us at some point.

[00:06:53] Doug McIntyre: If so, buy Disney’s dip, you either have a dip now or you’ve got one coming. If you think the issues between, among the governments around the world and the United States will resolve themselves by the dip.

[00:07:08] Lee Jackson: Yeah.

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