Disney parks segment posts significant increases in revenue and operating income
Posted
From the press release.
Disney Parks, Experiences and Products revenues for the quarter increased 17% to $7.8 billion and segment operating income increased 23% to $2.2 billion. Higher operating results for the quarter reflected increases at our international and domestic parks and experiences businesses, partially offset by lower results at our merchandise licensing business.
Higher operating results at our international parks and resorts were due to growth at Shanghai Disney Resort, Disneyland Paris and Hong Kong Disneyland Resort. The increase at Shanghai Disney Resort was due to higher volumes and guest spending growth. Higher volumes were attributable to increased attendance while guest spending growth was due to increases in average ticket prices and food, beverage and merchandise spending. The increase in operating results at Disneyland Paris was due to volume growth, which was attributable to higher attendance, and increased guest spending, partially offset by higher costs. Guest spending growth was due to increases in average ticket prices, average daily hotel room rates and food, beverage and merchandise spending. The increase in costs was primarily due to inflation and higher costs associated with new guest offerings. Higher results at Hong Kong Disneyland Resort reflected more operating days in the current quarter due to COVID-19-related closures in the prior year quarter.
Operating income growth at our domestic parks and experiences was attributable to an increase at Disney Cruise Line, partially offset by the comparison to a real estate gain in the prior-year quarter. Higher results at Disney Cruise Line were due to an increase in passenger cruise days including the addition of the Disney Wish, which launched in the fourth quarter of the prior year, partially offset by higher costs associated with our ongoing fleet expansion. Results at our domestic parks and resorts were slightly unfavorable to the prior-year quarter, as a decrease at Walt Disney World Resort was largely offset by growth at Disneyland Resort. The decrease at Walt Disney World Resort was due to higher costs, partially offset by increased volumes. Higher costs reflected cost inflation, increased expenses associated with new guest offerings and higher depreciation. The increase in volumes was due to attendance growth and higher occupied room nights. Increased operating income at Disneyland Resort resulted from growth in attendance and guest spending, partially offset by higher costs. Higher guest spending was due to increases in average ticket prices and average daily hotel room rates. The increase in costs was primarily due to higher operations support costs and increased costs associated with new guest offerings.
The decrease in merchandise licensing operating income included lower revenue from merchandise based on Star Wars, Spider-Man, Frozen and Avengers.
The stock is getting hammered for their streaming results, which were more or less in line with what analysts expected. It's moving in the right direction, but Disney doesn't seem to have the benefit of being a tech company that could bleed cash for a decade and still be worth a bazillion dollars.
They're attributing some of this segment growth to DCL, which makes sense since they went from four ships to five, and our napkin math is that the price per person per day is the highest on average on the Wish (3/4-night Bahamas). It's easily double what we paid eight years ago for the same itineraries when it was the Dream. Not sure when the Treasure will start next year, presumably swapping in for the Fantasy (7-night Eastern/Western Caribbean), but I bet they'll up the prices there too.
The WDW comment is interesting. Higher costs partially offset by increased volume. Higher attendance is surprising, because it doesn't feel more crowded. I also wonder why, in response to that, they've opened up pass sales and they're doing more room discounting. Although maybe that's just the data, which Iger seems more in tune to compared to Chapek.
Jeff - Editor - CoasterBuzz.com - My Blog
It's possible that the overall park capacity is also higher--more bandwidth in food service, more entertainment offerings/meet and greets/etc. I thought it was interesting that per-cap was up only about 2% YoY given the underlying rate of inflation.
I read the transcript, and found it fascinating that management wants people to move off of the D+ ad-free tier onto the ad-supported tier--the stated reason is that the revenue per user is higher with advertisements, despite the lower price point. Bob 1.0/3.0 spent a lot of time talking about their ability to target viewers in a fine-grained way, and that such targeting had a lot of value to the advertisers. This seems like Internet advertising but four years ago, and we all know how that worked out, but what do I know?
The other thing of note (and was also repeated a few times IIRC) was that Disney is becoming very sensitive to the cost of sports broadcast rights. This lines up with the reports that ESPN has bowed out of any conversations around the Pac 12-soon-to-be-10, and was apparently content to let others take over their share of the Big 10-but-really-14-and-soon-to-be-16. Makes me wonder how long the sports rights fees gravy train is going to keep rolling.
That is surprising. On the Internets, you're better off getting money from people than having them see ads. By a lot. And sometimes we'll watch old series on Hulu (working through Scrubs right now) or Discovery+ (countless HGTV shows, and Mythbusters) as more of a background thing. Even in that scenario, I'll pay up to avoid the ads. I still won't do it for YouTube because $12 versus free isn't a great value proposition for, to be generous, uneven content quality.
Jeff - Editor - CoasterBuzz.com - My Blog
The ad supported trend is frustrating. I grabbed a deal on the ad supported Hulu and they just insert ads right in the middle of scenes. It's not a good experience.
I’m also in the take my money but don’t show me ads camp. But I recognize that I’m in a different point of the time-money curve than most.
Brian Noble:
The other thing of note (and was also repeated a few times IIRC) was that Disney is becoming very sensitive to the cost of sports broadcast rights.
Probably not something Disney would delve into, but I wonder if the collapse of most of the regional sports networks across the country will have an impact on rights going forward.
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