The King Takes a Hit
As the most resilient company on earth according to Bob Iger, Disney who employs 62,000 begins to feel the effects of the current economic downturn. But everyone asks, will it affect prices and jobs? I believe the answer is yes and more.
Profits for Disney World plunged 32% during its most recent quarter reflected by low theme-park attendance, DVD sales, and advertising revenues. "This has been the weakest economy in the history of Disney World" said CEO Bob Iger.
As the affects of the economy fell upon Burbank CA media & entertainment empire, revenues fell well below analysts expectations as the recession continued to spread. Disney earned about $845 million in the last quarter of 2008 compared to $1.3 billion one year ago resulting in a total shortfall of 8% to $9.6 billion for the year.
Up until now, Disney had not felt the impact of the slowdown said the analyst from Morningstar Inc. All of Disney's business segments including it's three-parks division assuming a quarter of the company's revenue suffered greatly. Profits dropped 24% to $382 million where revenues slumped 4% to $2.7 billion for parks and recreation unit.
Weakness in domestic resorts probably was the cause of 5% quarterly slide reflected in limited guest spending. Even hotel occupancy fell to 85% at Disney Resort Hotels in Orlando though guests spent slightly more on hotel accommodations.
Currently, the buy four nights get three free promotion seems to be increasing over last year which is a plus for Disney in the first quarter. One bit of good news though, discounts for the 7 nights at a Disney World Resort will be extended to Aug 15, 2009.
Although Disney has experienced some reduction in profit margins, they feel that guests will share their experience creating more exposure to movies, television and merchandise.
Consumers who are expecting deep discounts could cause Disney to begin diluting their premiums. Disney experienced the lowest revenue shortage from its film division due to the weaker slate of DVD releases compared with other years including WALL-E, The Chronicles of Narnia, Prince Caspian, and Tinker Bell.
Going forward, Disney will be very aggressive in slashing costs said Iger.
Profits for Disney World plunged 32% during its most recent quarter reflected by low theme-park attendance, DVD sales, and advertising revenues. "This has been the weakest economy in the history of Disney World" said CEO Bob Iger.
As the affects of the economy fell upon Burbank CA media & entertainment empire, revenues fell well below analysts expectations as the recession continued to spread. Disney earned about $845 million in the last quarter of 2008 compared to $1.3 billion one year ago resulting in a total shortfall of 8% to $9.6 billion for the year.
Up until now, Disney had not felt the impact of the slowdown said the analyst from Morningstar Inc. All of Disney's business segments including it's three-parks division assuming a quarter of the company's revenue suffered greatly. Profits dropped 24% to $382 million where revenues slumped 4% to $2.7 billion for parks and recreation unit.
Weakness in domestic resorts probably was the cause of 5% quarterly slide reflected in limited guest spending. Even hotel occupancy fell to 85% at Disney Resort Hotels in Orlando though guests spent slightly more on hotel accommodations.
Currently, the buy four nights get three free promotion seems to be increasing over last year which is a plus for Disney in the first quarter. One bit of good news though, discounts for the 7 nights at a Disney World Resort will be extended to Aug 15, 2009.
Although Disney has experienced some reduction in profit margins, they feel that guests will share their experience creating more exposure to movies, television and merchandise.
Consumers who are expecting deep discounts could cause Disney to begin diluting their premiums. Disney experienced the lowest revenue shortage from its film division due to the weaker slate of DVD releases compared with other years including WALL-E, The Chronicles of Narnia, Prince Caspian, and Tinker Bell.
Going forward, Disney will be very aggressive in slashing costs said Iger.
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