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Company-wide profits have increased, driven by the expansion of blockbuster videos and streaming. But Disney said slowing demand for theme parks “could have an effect on quarters over the long term. “
By Brooks Barnes
Report from Los Angeles
In Disney’s likely game of corporate Whac-a-Mole, a new flashpoint has emerged: Americans, hit by years of peak inflation, have less money to spend on entertainment, jeopardizing the expansion of Disney’s theme parks.
On Wednesday, Disney reported weaker-than-expected effects on theme parks for the quarter ended June 29. Revenue rose 2% year-over-year to $8. 4 billion, while operating profit fell 3% to $2. 2 billion. Disney placed the blame on a “moderation in customer demand” that “exceeded our past expectations,” as well as emerging costs. Disney said the slowdown in demand “may have an effect on quarters over the long term. “
“The low-income customer is feeling a little bit of stress, and the higher-income customer travels a little bit more around the world,” Hugh F said. Johnston, Disney’s chief financial officer, at a conference call with analysts.
Theme parks have been much more financially important to Disney over the past decade. They are the ones who financed Disney’s costly expansion into streaming and took over the company’s ailing cable TV business. Last year, Disney Experiences, a department that includes theme parks and cruise ships, contributed 70% of the Walt Disney Company’s operating profits, up from 30% a decade ago.
Robert A. Iger, Disney’s chief executive, called theme parks and cruise ships a “key engine of expansion. “Last year, Disney announced it would spend about $60 billion over the next decade to expand its parks and continue the Disney Cruise Line structure, double the amount from the past decade. Disney Experiences president Josh D’Amaro is expected to unveil a series of express expansion plans at a fan conference in Anaheim, California, on Saturday.
But there is reason to worry that the U. S. economy is headed for a recession. Moreover, the global post-pandemic surge is largely over. Citing a “normalization” of demand, Comcast said last month that quarterly profits at its Universal theme parks fell 11 percent, while pre-tax profits fell 24 percent.
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