The Walt Disney Company (DIS) reported its third quarter results revealing its streaming service was profitable for the first time, but its theme park unit fell short of sales and profit expectations.
The Walt Disney Company CFO Hugh Johnston joins Yahoo Finance Executive Editor Brian Sozzi to give insight into the company’s earnings.
Johnston says the parks business may face headwinds for another couple of quarters, but that the company expects it to bounce back. He also points to Disney’s "creative engine really getting back on track," noting the company’s recent success at the box office.
In regards to the strength of the consumer, Johnston believes: "We certainly see consumers behaving in a way, I wouldn’t call it recessionary necessarily. They’re watching their pennies a little bit more."
In terms of how the company may change operating with its theme park unit, Johnston claims: "Number one, we are putting a tight clamp on our cost management. We’re usually good at that in the parks and we’re taking it up to another level. Number two, we’re being very selective about creating value offerings for certain consumers that are more sensitive to value these days, but doing it in a responsible way, not in a way that’s going to be disruptive to the financials of the company. When you put those things together, given the strength of the IP that we have, given that people do tend to protect their vacations more than other types of spending, we tend to get hit late, we tend to get hit less, and we tend to improve more quickly than others."
Johnston credits Disney’s box office resurgence to CEO Bob Iger’s willingness to scrap or delay projects that aren’t working, therefore improving the quality of the product. Johnston admits that Disney may have been "a little too aggressive on quantity" when it launched its streaming product and that quality may have suffered a bit, saying it’s something Iger has been focused on fixing.
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