Investing in Disney Stock (DIS)

What you need to know when investing in The Walt Disney Co.

The Walt Disney Co. (DIS) is a global entertainment company that operates a broad range of businesses, including theme parks, resorts, a cruise line, broadcast TV networks, and related products. Disney also produces live entertainment events, and produces and delivers a wide range of film and TV entertainment content through digital streaming services. Since October 2020, the company has focused on accelerating the growth of its direct-to-consumer (DTC) strategy through its media networks and studio entertainment operations.

The company was founded in 1923 as the Disney Brothers Cartoon Studio by brothers Walt and Roy Disney. By 1929 the Disney brothers' partnership had been divided into four companies focusing on production, film recording, realty and investment, and other enterprises. Disney expanded into theme parks with the opening of Disneyland in 1955. The company issued its first over-the-counter (OTC) stock in 1940 and had its IPO in 1957.

Disney is headquartered in Burbank, Calif. Bob Chapek has been chief executive officer (CEO) of Disney since February 2020, succeeding Robert Iger, who is executive chairman and chairman of the board. The company is classified as a member of the Communication Services sector, operating within the entertainment industry. Because of the breadth of its operations, Disney's competitors include diversified media and entertainment companies like ViacomCBS Inc. (VIAC) and Comcast Corp. (CMCSA), as well as theme park companies such as Six Flags Entertainment Corp. (SIX) and streaming companies such as Netflix Inc. (NFLX). For its 2020 fiscal year, ended Oct. 3, 2020, Disney reported a $2.5 billion net loss on total revenues of $65.4 billion.

Key Takeaways

  • Disney is a global entertainment company operating theme parks, resorts, a cruise line, broadcast TV networks, and related products.
  • Disney's primary rivals include media and entertainment companies like ViacomCBS Inc. (VIAC), Comcast Corp. (CMCSA), and Netflix Inc. (NFLX).
  • For FY 2020, ended Oct. 3, 2020, Disney reported a net loss of $2.5 billion on total revenues of $65.4 billion.
  • Disney sued former Marvel Comics writers and illustrators in late Sept. 2021 to prevent them from taking over copyrights for their characters.

Recent Developments

  • On Sept. 30, 2021, actress Scarlett Johansson settled her lawsuit related the movie, Black Widow, with Disney. She had alleged breach of contract over Disney's release of the film simultaneously in theaters and on the company's streaming service. (see details in Q&A below).
  • On Sept. 24, 2021, Disney sued former Marvel Comics writers and illustrators to prevent them from taking over copyrights for their characters. These artists or their representatives had served Disney in March with copyright termination notices for several characters from the Marvel Comics universe. (see details in Q&A below).
  • On Sept. 21, 2021, Disney CEO Bob Chapek told investors at the Goldman Sachs Communacopia conference that the growth of the Disney+ streaming service had been slowed by production delays, event postponements, and difficulty in finding partners for new markets. Chapek also said that Disney had no immediate plans to reinstate dividend payouts or do stock buybacks, saying this would happen only "in the distant future." The company suspended dividends in May 2020 due to the pandemic.

Disney’s Latest Developments

What's Happening With Disney's Scarlett Johansson Lawsuit?

On July 29, 2021, Black Widow star Scarlett Johansson sued Disney, alleging that the company had breached her contract when it released the film on its Disney+ streaming service and in theaters simultaneously. She said the move "dramatically" reduced box office revenue and, thus, her compensation. The lawsuit said that Disney had promised that Black Widow would receive an exclusive release in theaters for about 90 to 120 days. Johansson's lawsuit sparked talk in Hollywood that other actors might follow Johansson and file similar lawsuits against Disney. The lawsuit comes amid Disney's major focus on expanding streaming viewership on its Disney+ service, especially as the COVID-19 pandemic has reduced attendance at movie theaters. Johansson and Disney reached a settlement on Sept. 30, 2021. Terms were not disclosed, though her agent reportedly asked for tens of millions of dollars to compensate for lost bonus money on top of Johansson's $20 million salary for the movie. Johansson has played the Marvel character Black Widow in eight blockbuster films.

What's Happening With Disney's Marvel Comics Lawsuit?

In spring 2021, former Marvel Comics writers, illustrators, and their representatives served Disney-owned Marvel Entertainment copyright termination notices. The lawsuits sought to reclaim rights related to Marvel characters that the writers and illustrators had created, such as Iron Man, Spider-Man, Thor and Black Widow. The lawsuits may have major financial implications for Marvel. If they are successful, the former Marvel employees and their representatives could receive a portion of profits from new works based on the copyrighted material.

Disney filed multiple lawsuits on Sept. 24, 2021 to invalidate those copyright-termination notices. The company's legal representative in the matter, Daniel Petrocelli, said that the termination notices are "invalid" because the works in question were "works made for hire and thus owned by Marvel." Writers and illustrators disagree. The termination attempts are based in a provision of copyright law that allows authors or their heirs to regain ownership of a product after a certain number of years, under certain conditions.

FAQs

Has DIS ever split its stock?

Disney has split its stock 7 times:

  • July 9, 1998: a 3-for-1 split.
  • May 15, 1992: a 4-for-1 split.
  • March 5, 1986: a 4-for-1 split.
  • Jan. 15, 1973: a 2-for-1 split.
  • March 1, 1971: a 2-for-1 split.
  • Nov. 15, 1967: a 2-for-1 split.
  • Aug. 20, 1956: a 2-for-1 split.

Does DIS pay a dividend?

Disney does not currently pay a dividend. Disney announced on Nov. 12, 2020 that it would forgo payment of a semi-annual cash dividend for the second half of FY 2020, ended Oct. 3, 2020. Previously, the most recent dividend payment was paid Jan. 16, 2020.

How many shares of DIS stock are there?

As of Aug. 4, 2021, Disney stock had 1,817,126,595 shares outstanding.

Are Disney's parks open?

Many of Disney's major parks have reopened. As of Oct. 7, 2021, all Walt Disney World theme parks, Disneyland Park, Disney California Adventure Park, the Downtown Disney District, the Hotels of the Disneyland Resort, and Disney's Blizzard Beach Water Park are open. Some additional parks and experiences remain closed or at limited guest capacity. Guests two years and older are required to wear adequate face coverings while indoors.

Are Disney cruises operating?

Disney cruises are in the process of resuming operations. Disney Dream and Disney Fantasy are currently sailing, with Disney Wonder set to resume sailing out of Galveston Texas in November 2021. Disney Magic will resume select itineraries in late October 2021. All cruises require that guests 12 years of age and older be fully vaccinated, while those under 12 must take pre-trip COVID-19 tests and take a test for the virus upon embarkation. All guests two years of age and older are required to wear face coverings indoors. Certain onboard experiences remain closed or at limited guest capacity.

Who is Disney's CEO?

Disney's CEO is Bob Chapek. Prior to his appointment as CEO on Feb. 25, 2020, Chapek spent nearly three decades at Disney, most recently as chairman of Disney Parks, Experiences and Products. Chapek was also chairman of Walt Disney Parks and Resorts. In these positions, Chapek dramatically expanded the company's parks and related offerings, launching the Shanghai Disney Resort and nearly doubling the Disney Cruise Line fleet.



Article Sources

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  2. The Walt Disney Co. "About the Walt Disney Co." Accessed Oct. 6, 2021.

  3. Goldman Sachs. "Disney Magic Comes to NYSE in IPO." Accessed Oct. 6, 2021.

  4. The Walt Disney Co. "Form 10-K for the fiscal year ended Oct. 3, 2020," PDF Page 2. Accessed Oct. 6, 2021.

  5. Yahoo! Finance. "The Walt Disney Company (DIS)." Accessed Oct. 7, 2021.

  6. The Walt Disney Co. "Form 10-K for the fiscal year ended Oct. 3, 2020," Page 34. Accessed Oct. 6, 2021.

  7. New York Times. "Disney Sues to Keep Complete Rights to Marvel Characters." Accessed Oct. 7, 2021.

  8. New York Times. "Scarlett Johansson and Disney Settle Suit Over ‘Black Widow’ Pay." Accessed Oct. 7, 2021.

  9. New York Times. "Scarlett Johansson Sues Disney Over 'Black Widow' Release." Accessed Oct. 7, 2021.

  10. Barron's. "Disney Suspends First-Half Dividend Amid Covid-19 Disruption." Accessed Oct. 7, 2021.

  11. Seeking Alpha. "Walt Disney CEO Bob Chapek Presents at Goldman Sachs Communacopia Conference." Accessed Oct. 7, 2021.

  12. The Walt Disney Co. "Investor Relations - Frequently Asked Questions." Accessed Oct. 7, 2021.

  13. The Walt Disney Co. "Form 10-Q for the quarterly period ended July 3, 2021," PDF Page 1. Accessed Oct. 7, 2021.

  14. The Walt Disney Co. "Update on Disneyland Resort Operations." Accessed Oct. 7, 2021.

  15. The Walt Disney Co. "Returning to a World of Magic." Accessed Oct. 7, 2021.

  16. The Walt Disney Co. "Disney World - Parks and Tickets: Know Before You Go." Accessed Oct. 7, 2021.

  17. The Walt Disney Co. "Disney Cruise - Know Before You Go." Accessed Oct. 7, 2021.

  18. The Walt Disney Co. "Bob Chapek." Accessed Oct. 10, 2021.