Disney is seeing ‘resilient’ theme-park attendance despite turbulent economy, says analyst

Faced with turbulent economic times, the Walt Disney Co. theme park business. he could still see some magic.

Jessica Reif Ehrlich of Bank of America wrote Thursday that attendance at Disney DIS,
+ 0.86%
The parks “run resilient despite recent macro volatility, as visitors rarely cancel trips once booked.”

He added that the company’s decision to cancel Disneyland’s annual season tickets “is a positive indicator of booking trends and general demand,” and hoped the entertainment giant could receive a boost from foreign visitors. . As international travel continues to rise, foreign guests could help offset “any potential softness in U.S. consumer demand,” according to Reif Ehrlich.

There could also be positive signs elsewhere in the Disney business. Reif Ehrlich noted that the company expanded its direct-to-consumer transmission service to 40 markets during its third fiscal quarter, a move it anticipates will spur a sequential acceleration in net subscriber additions during the period.

Reif Ehrlich also ignored recent concerns about the status of Disney Indian Premier League cricket rights. The company currently owns the television and broadcast rights to the popular cricket league, which has helped Disney build its broadcast subscriber base in India, but Disney’s management team opted to not to renew the transmission part of these rights for the next five years amid high bid prices. .

Learn more: Disney sets aside key Indian cricket league digital rights as streaming wars intensify

While Reif Ehrlich acknowledged that the Indian Premier League issue is “the key investor concern” for Disney’s short-term streaming business, he considered the company’s choice to let five more years pass. broadcast rights as “prudent,” citing “the high cost of these rights,” as well as the lower average revenue per user generated by Disney’s Indian streaming service subscribers. In addition, there has been a ” changing investors ’approach to profitability versus subscribers,” he continued.

Read: Disney + will bring an advertising playback service to the United States in late 2022

The changing dynamics in cricket transmission could cause Disney to “reevaluate” its Disney + subscriber forecast for 2024, according to Reif Ehrlich, but thought this move would be “a negative one-day headline” that could be used to “delete a key”. overflowing with investors ”and restoring expectations for the streaming business.

Reif Ehrlich lowered his price target on Disney shares to $ 122 from $ 140, but maintained his buy rating on the name. Shares of Disney have fallen 0.3% in Thursday morning trading and are down about 33% over the past three months, according to the Dow Jones Industrial Average DJIA,
+ 0.64%
has lost 11%.

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