Walt Disney CFO Christine McCarthy said the entertainment giant’s total exposure to Russia and Ukraine combined is about 2% of its total operating income — with Ukraine about 10% of that 2%.
During a Q&A at Morgan Stanley’s technology, media and telecom conference, she called the situation there “very unfortunate.” Disney was the first Hollywood studio to announce (on Feb. 28) that it was pulling its theatrical releases from Russia temporarily in response to the country’s invasion of Ukraine. Others followed.
“Theatrical release of films in Russia is not the only thing that we have. Many parts of our business have different relationships and business ventures in Russia,” she said. “We have had some licensing and theatrical distribution. But that [2%] is what the overall exposure of our company is… So it is not a significant number for us.”
Disney’s segment operating income was $7.8 billion for the fiscal year ended in Oct., and $3.3 billion for the fiscal first quarter ended in Jan.
McCarthy also defended ticket pricing at Disney theme parks and discussed the company’s decision, announced last Friday, to offer a less expensive version of Disney+ with ads.
McCarthy called Disney’s DTC business “a toddler” and said the company “had some preconceive notions of what we thought consumers wanted. We found consumers do not mind, and some are more favorably disposed to services with ads than without ads.” And there was a lot of advertiser demand. She said the service, launching in late 2022, can now be part of the conglom’s upfront discussions when they get rolling later this month. “The ad community was extremely pleased with this announcement.”
On parks, “Some people have more time than they do money, and some have more money than they do time,” she said, with new tiers of ticket pricing and services catering to both.
Disney has a wide range of ticket prices, including an entry-level that has not been raised since 2019, she said. “You don’t get everything, you don’t get every day, you don’t get peak periods. But you can go into the park just like anybody else. [And] You can buy up or trade up for a more engaged experience, or more flexibility.”
She said events like parades and fireworks and character meet-and-greets – which are still discontinued but will restart sometime this year – attract guests and help unclog the lines at attractions. The parks aren’t back to full capacity yet but getting there.
With the business of streaming coming under fire for high costs and red ink, she stood by the company’s guidance for DTC subscriptions and profitability. “We feel good about 230 to 260 Disney+ subscribers by 2024. We are driving towards it,” she said. “It is not a Hail Mary.” It had reached 129.8 million subscribers at the end of last year.
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