The company is furloughing off a massive amount of people in divisions unrelated to its theme parks, including people on the studios side. These staff cuts reportedly top 100,000 people.
That’s still arguably better for workers than Disney’s solution, which was to just turn almost everyone loose on April 19 to apply for unemployment. Sure, they keep their medical. But that doesn’t cover the other bills.
What’s the difference between Disney and its competitors?
Almost all of Disney’s key business segments depend on large gatherings of people: theme parks, theatrical releases, sports (ESPN) and cruise lines. All of these are effectively dead in the water at this point, thanks to restrictions on gatherings and non-essential businesses.
We’ve been saying since Day 1 — both here and on our pop culture YouTube channel — that Universal has a leg up on Disney in this regard, as people still pay their Comcast cable and internet bills while in quarantine.
Disney depends on its Parks and Resorts for 35% of its revenue. Theme Parks only make up 5% of revenue for Comcast.
That is a huge, huge difference.
WarnerMedia doesn’t have a dog in this, as they don’t own any theme parks. Warner is owned by AT&T, and like Comcast, people are still paying their phone and TV bills. They’re getting ready to launch HBO Max soon, which many feel is the first legitimate Netflix competitor to enter the streaming wars.
Sure, Disney has Disney Plus, but they’re still in debt from that and it won’t even put a dent in the lost revenue from the Parks. And with WarnerMedia HBO Max and NBC’s Peacock right around the corner, the competition is going to be fierce.
Disney’s extensive furloughs stand in sharp contrast to the other two media giants – Comcast, which owns NBCUniversal, and AT&T, which owns WarnerMedia – which haven’t yet announced any furloughs or layoffs.
These are the three largest media conglomerates, in a category above all the others: Disney’s market cap is $185 billion, Comcast’s is $169 billion, and AT&T’s is $222 billion. They do face some similar challenges: all three have movie studios that are suffering from the closure of theaters and all are seeing their ad revenue plummet as live sports has been halted. And all three are working to get ahead of the cord-cutting trend and have new services designed to own that direct-to-consumer relationship.
But the finances of these companies are incredibly different. Parks and Resorts is Disney’s largest division, responsible for 35% of its revenue in 2019. That division includes not only theme parks and resorts, but also a cruise line. In contrast, Comcast derived only 5.4% of its revenue from parks such as Universal Studios, and AT&T doesn’t own any parks.
The Mouse will be down, but not out.
After the country gets through this, we expect to see a much different Disney. A much leaner company that will have to let go of its ambition of “world dominion” and focus on rebuilding its core brand.
What Disney will ultimately look like on the other side is anybody’s guess.
[Sources: FT, CNBC]
Pirates & Princesses (PNP) is an independent, opinionated fan-powered news blog that covers Disney and Universal Theme Parks, Themed Entertainment and related Pop Culture from a consumer's point of view. Opinions expressed by our contributors do not necessarily reflect the views of PNP, its editors, affiliates, sponsors or advertisers. PNP is an unofficial news source and has no connection to The Walt Disney Company, NBCUniversal or any other company that we may cover.