Walt Disney is raising the prices of its streaming services Disney+ and Hulu by as much as 27 percent after a series of woke film remakes disappointed at the box office, and visits to Walt Disney World in Florida declined amid the company’s war with Governor Ron DeSantis.
Customers with Disney+ will see their monthly costs for the ad-free service rise by 27 percent, from $11 to $14. Hulu prices for ad-free will rise by 20 percent, to $18. The lowest-priced plans, Disney+ and Hulu with ads, will remain at $8 a month.
Disney’s results for the third quarter, released on Wednesday, were mixed.
They exceeded Wall Street’s estimates on adjusted per-share earnings and the company said it was on track to cut costs by more than the $5.5 billion it promised investors in February.
But the company missed Wall Street targets for revenue and fell slightly behind expectations on U.S. subscribers of Disney+, though it has significantly trimmed its losses.
Chief Executive Bob Iger, who returned from retirement for a second stint running Disney, faces formidable challenges on nearly all fronts of the entertainment empire, beyond Wall Street’s mandate to make its streaming business profitable.
It is coping with an eroding television business and a movie box office that has yet to return to pre-COVID levels.
The company is also bruised from a series of woke flops at the box office.
The Walt Disney Company is facing significant financial setbacks after a series of disappointing woke films
Lightyear, released one year ago with a reported budget of $200 million, brought in a modest $226.7 million in worldwide ticket sales and received a decidedly mixed reception
Under the control of current chief executive Bob Iger, Disney has followed the progressive path of many other U.S. corporations
According to an analysis by Valliant Renegade, which aims to look at the business and financial side of Hollywood, the last eight studio releases put out by the company have not performed as well as expected.
Guardians of the Galaxy and its most recent endeavor, a live-action version of The Little Mermaid, have failed to meet expectations, while two other recent films, Strange World and Lightyear were complete failures.
Even Disney’s valuable archive has seen old characters given progressive makeovers, with ‘offensive’ imagery removed from rides and movies. Some conservatives feel the company has gone too far in its woke reinvention.
‘One important aspect we always discuss here, which is worth reminding everyone about, is that Disney retains exclusive rights to its content after theatrical release,’ said Valliant Renegade, a Twitter and YouTube cultural critic.
Disney no longer licenses content, such as the Marvel Cinematic Universe, to third-party platforms such as Netflix and Amazon and therefore has forfeited billions of dollars in potential revenue.
‘The once envied entertainment company is now struggling to find a profit on almost every single film released,’ the media analyst explained.
‘Disney’s bloated budgets for these projects are vastly higher than the competition on average, particularly considering the fact that every single film Disney releases comes with blockbuster production price tags.’
In a statement on Wednesday, Iger referred to Disney undergoing an ‘unprecedented transformation,’ including a restructuring of the company, to help it become more efficient and restore creativity.
‘In the eight months since my return, these important changes are creating a more cost-effective, coordinated and streamlined approach to our operations, that has put us on track to exceed our initial goal of $5.5 billion in savings,’ he said.
Embattled Disney CEO Bob Iger said on Wednesday the company was facing an ‘unprecedented transformation’
Disney said it cut losses at its streaming video services to $512 million in its fiscal third quarter, narrower than its loss of about $1.1 billion a year ago.
It added 800,000 Disney+ subscribers, 100,000 subscribers shy of analyst estimates, and shed 12.5 million subscribers to the Disney Hotstar service in India, or nearly a quarter of its subscribers, as it gave up rights to Indian Premiere League cricket matches.
Disney reported revenue of $22.33 billion for the quarter ended July 1, up 4% from a year ago but short of the Wall Street average estimate of $22.5 billion, according to Refinitiv data.
It delivered per-share earnings of $1.03, when excluding certain items, beating Wall Street projections of 95 cents a share.
It was not immediately clear if the adjusted profit figures were comparably calculated.
The company took $2.65 billion in impairment and restructuring charges in the quarter, reflecting the cost of removing some content from its streaming services, terminating licensing agreements and $210 million in severance payments to laid-off workers.
Disney’s traditional television business continued its decline, with lower revenue and operating income across the company’s broadcast and cable TV business.
Higher sports programming production costs, together with lower affiliate revenue, dragged down the performance of its cable channels.
TV revenue for the quarter decreased 7% to $6.7 billion, while operating income fell 23% to $1.9 billion.
Disney’s direct-to-consumer business reported a 9% increase in revenue to $5.5 billion, as the average revenue per subscriber rose at Disney+ and Hulu.
Content sales and licensing, the unit that includes film and television sales, reported a deeper operating loss of $243 million in the quarter, compared with a loss of $27 million a year ago.
Disney’s Parks, Experiences and Products group reported a 13% increase in revenue in the quarter, to $8.3 billion, and an 11% bump in operating income to $2.4 billion.
The results were buoyed by the rebound of the Shanghai Disney Resort, which was open for the full quarter compared with the same time a year ago, when COVID-19 forced the park to be closed for all but three days.
The unit had lower operating income at its domestic parks, due to decreases at Walt Disney World Resort in Orlando, Florida.
The park is at the heart of a battle between DeSantis and the company, which has seen DeSantis remove Disney’s special self-governing status and threaten to close some of the theme park rides.
Iger in response has cancelled investments in Florida, including a $1 billion campus which would have created 2,000 jobs.
Disney’s film offerings are also suffering.
The quarter included the release of ‘Guardians of the Galaxy Vol. 3,’ which performed less well at the box office than the prior year’s ‘Doctor Strange in the Multiverse of Madness.’
Also released during the most recent quarter was the live-action remake of ‘The Little Mermaid,’ which disappointed.
The Little Mermaid has neared the $500 million worldwide box office milestone despite a slow start.
Its domestic box office total is now $270.2 million and its foreign tally stands at $229.1 million, for a worldwide total of $499.3 million.
The film dropped 21.5 percent in its fifth weekend, despite losing 205 theaters, for a revised theater count of 3,275.
The reviews from the critics at Rotten Tomatoes weren’t terribly strong, with a 67 percent ‘Fresh’ rating, though the audience score is much higher at 94 percent.
The film was controversial right from the start, with the casting of 23-year-old black actress Halle Bailey as the title character, Ariel.
The casting led to a wave of racist remarks, claiming her casting wasn’t accurate to the character from the original 1989 animated film, voiced by white voice actress Jodi Benson.
Benson herself defended the casting, saying in July 2019: ‘The most important thing is to tell the story.
‘And we have, as a family, we have raised our children, and for ourselves, that we don’t see anything that’s different on the outside,’ Benson added.
The film was produced on a budget of $250 million, with reports claiming the film would need to earn $560 million worldwide before turning a profit, after considering other costs including a massive marketing spend.
In other recent films, Lightyear, released one year ago with a reported budget of $200 million, brought in a modest $226.7 million in worldwide ticket sales and received a decidedly mixed critical reception.
By contrast, The Incredibles 2 in 2018, which was reported to have had a similar production budget, had worldwide box office sales of $1.2 billion.
Lightyear could not be shown in 14 Middle Eastern and Asian countries because of its depiction of a same-sex relationship. That also had an impact on its global box office performance.
Despite getting off to a somewhat slow start with a box office debut just under initial projections, The Little Mermaid has neared the $500 million worldwide box office milestone
Guardians of the Galaxy and its most recent endeavor, a live action version of The Little Mermaid have failed to meet expectation while two other recent films, Strange World and Lightyear were complete failures
In recent years, Disney has become increasingly woke.
Under the control of current chief executive Bob Iger, Disney has followed the progressive path of many other U.S. corporations.
In 2021, it stopped greeting park visitors as ‘ladies and gentlemen, boys and girls’, replacing that with ‘dreamers of all ages’.
It has slapped racism warnings on many of its best-loved films, including Dumbo (for the raucous black crows) and Lady And The Tramp (for the sinister Siamese cats).
Its resorts it ditched Minnie’s polka dot dress to be replaced with a Stella McCartney-designed trouser suit and the fairy godmothers in Sleeping Beauty that were deemed too exclusionary of men.
The brand has made numerous steps towards becoming more progressive recently – it included a gay kiss between two characters in Lightyear.
A new live-action film of Snow White, due out next year, has dispensed with the dwarves to ‘avoid reinforcing stereotypes’ and will have a Latina actress in the title role.
In January 2022, Disney revealed that its upcoming live-action remake of Snow White will not feature the classic depiction of the central character’s seven companions as dwarves
In October 2020, Disney also made a big move when it announced that it would be slapping racism warnings on a number of its decades-old movies like Peter Pan (seen)
Movies that now come with an anti-racism warning include 1970 musical comedy The Aristocats (seen), 1955’s Lady and the Tramp, and 1960 adventure Swiss Family Robinson
The move comes as Disney has laid off 7,000 employees in a cost-cutting move.
The cuts are part of Iger’s previously announced plan to slash $5.5 billion in costs.
The restructuring combines the film and television groups into a single Disney Entertainment unit and eliminates a division charged with distribution.
Iger had been working to revive Disney’s streaming business while ensuring the stability of their theme parks but he has also been dealing with efforts by Florida Governor Ron DeSantis to take over Disney World’s theme park district.
The feud between DeSantis and Disney started last year after the company, in the face of significant pressure, publicly opposed legislation concerning a bill that critics called ‘Don’t Say Gay.’
Then-Disney boss Bob Chapek pledged to fight for the repeal of the law banning schools from teaching five to nine-year-olds about sexual orientation and gender identity.
As punishment, DeSantis took over Disney World’s governing district through legislation passed by lawmakers and appointed a new board of supervisors.
Disney’s theme park is dubbed ‘the most magical place on earth’ – but the corporation has been embroiled in a spat with Florida Governor Ron DeSantis for almost two years
DeSantis and Disney started last year after the company, in the face of significant pressure, publicly opposed legislation concerning a bill that critics called ‘Don’t Say Gay’
Disney’s CEO at the time, Bob Chapek, spoke against the bill, stating that it could ‘be used to unfairly target gay, lesbian, non-binary and transgender kids and families’. He was later fired
DeSantis ended a 55-year-old deal that allowed Disney World to govern its vast resort itself — right down to controlling its own water, roads and emergency services.
The deal saved Disney millions of dollars in taxes.
The governor said the action was aimed at holding Disney accountable for entertainment he said is inappropriate for children.
‘The corporate kingdom finally comes to an end,’ he proclaimed.
‘There’s a new sheriff in town, and accountability will be the order of the day.’
Before the new board started, Disney pulled a fast one and signed agreements with the old board made up of Disney supporters that stripped the new supervisors of design and construction authority.
Chapek was removed as CEO in November 2022 sparking speculation that the company’s commitment to ‘wokeness’ during his tenure may have led to his ouster.
