Disney profits fall 46 percent in first quarter
For the last few weeks I have been hearing a similar refrain about Walt Disney World. It usually says something like “You would never know there was a recession from the amount of people at the parks.” But there is a recession and a significant one. And even though Disney has been aggressive in combating the problem by deeply discounting resort stays, they are still feeling it.
Yesterday, the Disney Company announced that its first quarter profits for 2009 were down a whopping 46 percent from last year’s pace. Now that is the company at large, including television, films and the like. But despite steady attendance numbers thanks to the “buy four nights and get three free” deal, the Parks and Resorts division is still hurting in comparison to last year’s numbers. Check out the story in the Orlando Sentinel.
…Disney’s theme-park division was hard hit during the quarter. Operating profit at Walt Disney Parks and Resorts fell 50 percent, dropping from $339 million to $171 million. Sales sank 12 percent to $2.4 billion.
Both sales and profit fell even though attendance slipped just 1 percent at Walt Disney World and rose 2 percent at Disneyland in Anaheim, Calif. The reason: Disney’s decision to use deep discounts to stimulate travel.
The effect was particularly pronounced at Disney’s hotels.
Hotel occupancy at Disney World, where Disney has been selling seven hotel nights for the price of four, actually climbed one percentage point during the period to 89 percent. But per-room spending plummeted 17 percent.
So despite Disney’s aggressive deals, and cost-cutting measures including layoffs, the parks are still suffering as a result of the economic downturn. It is what everyone expected to hear, but numbers like that are still sobering.
The Disney movie studio is also hurting, in fact they may be hurting even more so than the parks…
Disney’s move studio struggled even more than its theme parks. Operating profit plunged 97 percent to $13 million, in large part because movies such as Highly School Musical 3: Senior Year, Beverly Hills Chihuahua and Bolt failed to sell nearly as many DVDs as Enchanted, Game Plan and No Country for Old Men did a year ago. Disney said its theatrical releases during the quarter also struggled when compared with a year ago.
Disney has managed to stem the tide of the recession at their theme parks, but not so much at the movie theater. The difference here is that they just can’t discount films. They need something already in the pipeline to be a hit. But the future does look good for Walt Disney Pictures. On the DVD front, I would imagine Hannah Montana; the Movie will blow the doors off the year for them. And it does seem that Up has the potential to be a major hit. (Check out the extended trailer on the Walt Disney Pictures website. The dog with the talking collar looks hilarious!)
So I guess my point here in relaying this news is that Disney has done a fairly good job at keeping their heads above the proverbial waters. But we as fans have to expect to take the good with the bad. Costs will continue to be cut at the parks, and we will continue to benefit from deep discounts. I guess we will have to take the good with the bad. (But cutting Fantasmic! is still nonsense!!)




