Disney CEO Bob Iger spoke at length on the prospects of parks and entertainment as they vie for top billing at the company in terms of growth, telling investors on a call after earnings that “we have a healthy competition now in our company in terms of which of those two businesses is going to essentially prevail as the number one driver of profitability.”
“But I’m confident that both have that ability. Meaning both have the ability to grow nicely into the future, given all the investments that we’ve made and the trajectory that we’re on,” he said.
The comments, in response to a question asking him to asses the two core businesses come as the board could announce Iger’s replacement as CEO as soon as this week. Parks & Experiences chief Josh D’Amaro is reportedly in pole position. Dana Walden, co-chair of Disney Entertainment, has also been considered a front runner.
“f you go all the way back to 2005, when I became CEO, the return on invested capital in the theme parks and resorts business was not impressive, and actually not acceptable. And we also had not that much building in progress, meaning there wasn’t much expansion — but maybe for good reason, because the return of invested capital was so low,” Iger said. “As we added IP to our stable, including Pixar in ’06 and Marvel in ’09, and LucasFilm in 2012, and ultimately 20th Century Fox, we gained access to intellectual property that had real value in terms of parks and resorts, and enabled us to lean into more capital spending because of the confidence level we had in improving returns on invested capital due to the popularity of that IP,” Iger said.
“And when you look at the footprint of the business today, it’s never been more broad or more diverse, and the projects that we have underway are going to make it even more so. We’re expanding in every place we operate, and additionally, having been in Abu Dhabi just two weeks ago, was reminded how great the potential is to build in that part of the world. Because not only is it strategically located to reach a huge population that have never visited our parks, but we built in one of the most modern and technologically advanced ways. So, you know, as I look ahead, I actually am very, very bullish on that business and its ability to grow.”
The trajectory of streaming looks strong, as does film, with post post strong results for Disney’s fiscal first quarter ended in September. “We know that’s in the pipeline,” he said. “Looking back just a few years, our movie business was suffering from Covid, and the streaming business was obviously not an acceptable place.” Now, he said, the future of both Entertainment and Parks “are bright.”
Disney reported just under $24.7 billion in revenue and just over $5 billion in operating profit last quarter. Parks & Experiences accounted for about 40% of the former (or$9.4 billion) and 60% of the latter (or $3.11 billion).
