Disney pushes through sports betting despite missing earnings last fiscal quarter.
Disney’s plan to get into sports betting is somewhat a surprise. With their missing earnings in the last fiscal quarter, their motivation for pursuing this field is difficult to comprehend. According to Bob Chapek, the CEO, in a conference all,
“We believe that sports betting is a great opportunity for the company. It is driven by the consumer, specifically the younger consumers that will soon replace sports fans,” he replied after the analysts asked him about the company issuing its earnings report. Moreover, he added that with ESPN cable sports TV network, consumers will consider gambling more.
Disney Brand as is
Disney is popular for their young audience. Hence, some are asking if they will change their brand when it comes to gambling. The answer is no; there will be no brand withdrawal. They believe that it will strengthen the ESPN label, without destroying Disney’s reputation.
Furthermore, the company’s latest earnings until Wednesday were revealed. The stock was down 4% in trading after-hours. As for the share price, it closed down at $174.45.
Increase in EPS
The reports show that the adjusted earnings per share or EPS reached 37 cents. It follows a 20 cents per share loss a year earlier. However, analysts expected that the company would have a 52 cents adjusted EPS. Chapek said that the cause for this downfall is the ongoing pandemic. He believes that the typical growth rates will return next year.
Challenges brought by the pandemic
Just like any other businesses, Disney faced plenty of challenges when the pandemic started. They confessed to having a hard time in dealing with films, theme park operations, cruise operations, and more. This resulted in suspending its dividend, raising new capital, and expanding its streaming services more; hence, Disney+ was greatly promoted.
Concerning its earnings, the total revenue of the company grew 26% annually from $14.71 to $18.53bn. Meanwhile, the net income of $160m experienced a loss of $170m a year earlier.
Disney+ to the rescue
Without Disney+, the earnings would probably fall down more. With this streaming service, the company stayed flourishing. In fact, the subscriptions to Disney+ grew from two million to 118 million after it decided to more than double the subscriber base to from 57.5 million 116 million.
Chapek told the audience that, “The craving for content for the service is beyond the ordinary. When that happens simultaneously in a pandemic and you have to shut down production, it’s not a good combination. We recognized the need for the content exactly a year ago, so we prepared a very strong cadence of content that will now hit the pipeline in the second half of this (2022 fiscal) year.”
Disney seems to be returning again. Just this week, international travel restrictions were lifted in the United States for the first time. With this said, the company is looking forward to the tourists, although an immediate attendance boost is not expected. Hopefully, this pursuit in gambling will not result in failure.