Disney's Decline Is Not So Fairytale

After retracing all gains since 2014, what does Disney and Bob Iger need to do to get back on the right path?

What went so wrong for Disney that the share price fell 60% over a year and a half? Quite a few things, to be honest.

Chart credit to Charlie Bilello on Twitter.

We can start by talking about Disney’s move into the betting industry. Disney-owned ESPN entered into an agreement with casino chain Penn Entertainment to gain access to the sports betting market. Although the betting market is expanding quickly, this arrangement also has a slight air of urgency. Disney faces a severe reputational risk.

Bob Iger, Disney’s CEO, seems to be making this business move to generate more cash, a problem that Disney has struggled with for a while. However, not too many years ago, he said, “I don’t see The Walt Disney Company, certainly in the near term, getting involved in the business of gambling, in effect, by facilitating gambling in any way.” So, why the U-turn?

Cash grab

Disney is in a bind with the media sector changing. Consumers are turning their back on bundled cable TV deals for a more favourable à la carte business model, that of streaming services. This previous cable TV era allowed for ad revenue to be a big money maker for Disney. But now, content can be consumed more specifically, with each customer deciding what content they like and what they don’t. The battle between subscription services is now focused on winning the customers. And Disney is struggling.

In its third fiscal quarter, Disney's streaming segment lost $512 million, and the corporation is substantially hiking pricing for several services. They are clutching at straws.

Enter ESPN Bet. A record $93.2 billion was legally bet on sports in 2022, with sportsbooks garnering $7.5 billion in revenue. That is a more than sevenfold increase in three years: in 2019, the figures were $13 billion in wagers and $909 million in sportsbook revenue. Disney is getting in on the action, and the cash. Although the acquisition may be beneficial to the books and cash flow in the long run, there are still some other areas of concern for Mickey Mouse

In the rest of this article, we take a look at:

• The competition Disney face

• Why their competitors have such an advantage

• A need for more creativity in Disney’s streaming service

• Areas of business that are showing resilience

• A technical breakdown on the chart

Strong competition