Disney (DIS) Theme Parks Rebound Strongly, Despite Political Turmoil

In its Q2 FY 2022 earnings report in mid-May, The Walt Disney Company (DIS) revealed that revenue for its Parks, Experiences and Products segment more than doubled year over year (YOY). The segment, which includes Disney's well-known theme parks as well as resorts, cruise ships, and other experiences, was hit heavily by pandemic-related shutdowns throughout 2020 and 2021. Now, the recent earnings release could signal that the company is not only recovering strongly from the early stages of the pandemic, but also that it is weathering political backlash over its ongoing clashes with Florida lawmakers.

Key Takeaways

  • In its Q2 FY 2022 earnings, Disney reported that the business segment including theme parks more than doubled revenue YOY.
  • The revenue performance comes even as some of Disney's international parks remain shuttered due to the COVID-19 pandemic and while international guest attendance at domestic parks has been depressed.
  • Disney's theme park success in the past few months could be a sign that the company is well-positioned to continue recovering from the pandemic.

Theme Park Business Surges Despite Headwinds

With $7.2 billion in revenue for the segment including theme parks in Q2 FY 2022, there is still room for Disney's parks business to grow. The company said in February that domestic parks have not yet seen the major return of international guests. Furthermore, some international parks remain closed or have not been fully open in the most recent quarter.

Earlier in this month, Disney's newly appointed corporate affairs executive left the company abruptly after about four months on the job. This was one repercussion of the company's contentious and highly publicized back-and-forth with Florida lawmakers over the state's controversial "Don't Say Gay" bill. In April, Florida legislators voted to strip Orlando theme park Disneyworld of its self-governing status. Some conservative politicians and activists have called for a boycott of the company in response to the heated exchange.

Impact for Investors

The fact that Disney's theme parks business surged in the first three months of the year would seem to indicate at least that domestic guests have not shied away from the parks based on pandemic-related concerns. Investors who have been largely focused on Disney's high-profile Disney+ streaming service may not want to disregard the company's traditional revenue streams in light of this.

Investors may also cautiously read positively into the revenue results for Q2 as a sign that some of the loudest voices calling for boycotts on Disney have been largely unsuccessful. However, the surge in parks revenue for Q2 represents the period only through April 2, 2022, ending before some of the most contentious back-and-forth. Investors may need to wait until the company's Q3 FY 2022 earnings report for a fuller picture of the potential impact of this situation.

How Are Disney Theme Parks Performing?

In its recent earnings release for the quarter ended April 2, 2022, Disney reported that the segment including theme parks saw revenue roughly double YOY.

What Factors Affect Disney's Theme Parks Performance?

One of the biggest factors in recent years has been the COVID-19 pandemic, which shuttered or largely curtailed activities at many of Disney's theme parks. Another more recent factor is political pushback related to Disney's support of Florida's so-called "Don't Say Gay" bill.

What Should Investors Take Away From Disney's Theme Parks Performance?

Investors may want to not disregard Disney's traditional revenue streams, including its theme parks around the globe, as strong drivers of revenue going forward from the pandemic. It remains to be seen what the full impact of the Florida political controversy is on Disney's theme park business.

Article Sources
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  1. The Walt Disney Co. "The Walt Disney Company Reports Second Quarter and Six Months Earnings for Fiscal 2022," Pages 3 & 6.

  2. The Walt Disney Co. "The Walt Disney Company Reports Second Quarter and Six Months Earnings for Fiscal 2022," Page 2.

  3. CNBC. "Disney Investors Are Focused on Streaming, but Don't Forget About Theme Parks."

  4. Washington Post. "Conservatives Want to Cancel Disney. It's Not the First Time."

  5. The Walt Disney Co. "The Walt Disney Company Reports Second Quarter and Six Months Earnings for Fiscal 2022."

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