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Every hero’s journey has its downbeat second act — the part where many-headed monsters have to be fought back, where the road gets dark and twisty and teeming with threats — before the sun comes up and suddenly everything is, more or less, back on track.
The Walt Disney Company understands storytelling better than anyone. And Thursday’s earnings amounted to a triumphant shift in the narrative for Wall Street. Monsters, slain. Obstacles, cleared (ish). Future, bright (also ish).
See here: Two years, nearly to the day, since Bob Iger returned as CEO, Disney surprised investors Thursday with better-than-expected earnings, and — in a twist no one saw coming — the company offered investors guidance for the next three years.
Three years!
That’s almost unheard for any company. But it’s especially odd coming from Disney, which typically doesn’t offer any future guidance.
What it means is that Disney is confident in a way that few other media companies are right now, given the “uncertain macro environment,” as industry wonks like to say. (Translation: No one knows what the heck is going to happen with Donald Trump in the White House again. But more on that in a moment…)
“This is a happy plot twist for Disney,” Paul Verna, vice president at research firm eMarketer, told me. “Up until this quarter, I felt like you couldn’t really call it a turnaround. But now, particularly with that guidance, it does feel like Iger has put things back on track, and they are on a strong footing.”
Disney’s sudden font of confidence springs from a few key areas: movies like “Inside Out 2” and “Deadpool & Wolverine” that people actually want to watch, a second-straight quarter of streaming profits and billions of dollars in planned upgrades for its US theme parks.
Disney shares (DIS) shot up 9% in early trading Thursday.
Of course, the third act of the hero’s journey has its own pitfalls, which Disney still has to navigate.
Its cable TV business, which includes ABC, FX and ESPN, is still a drag because, well, customers have been ditching cable TV for more than a decade, and that’s only going to continue. Meanwhile, Disney’s various Star Wars and Marvel projects are expensive toys that have lately left fans and critics underwhelmed, casting a pall over two of Iger’s most lauded acquisitions — Lucasfilm and Marvel Studios — from his first term as CEO.
And at least one other major question mark hangs over the future of Disney’s $200 billion empire — and it’s a question that virtually every major corporation in America is weighing right now: What will Trump do?
Some corners of Corporate America, including many of Disney’s rivals, are foaming at the mouth in anticipation of a less restrictive regulatory environment under Trump, which could open the door to deals that would have been blocked under President Joe Biden. But Iger appears less keen to go that route.
“We, in many respects, have already consolidated,” Iger said on Thursday’s earnings call. “We don’t really need more assets right now.“
The bigger risks for Disney have to do with Trump’s economic agenda, which threatens to destabilize the economy and send inflation soaring anew, as well as Trump’s mercurial nature.
The president-elect has made clear that he plans to exact revenge on the people and institutions, including the media and Democrats, that he perceives as insufficiently loyal. And any CEO with a memory of Trump’s first term knows to take those threats seriously, as Trump rarely hesitates to put a brand or a CEO on blast.
“Trump has basically called Disney the enemy of the people,” Verna notes. “And to me, that has some serious implications, because it means that whatever the regulatory environment is, if Disney is in the crosshairs of the Trump administration, there could be some serious ramifications, certainly for the news business.”
Trump is reportedly still fuming over the ABC-hosted debate against Vice President Kamala Harris, and he is also suing the network and anchor George Stephanopoulos for defamation. And while many CEOs have been working overtime to curry favor with Trump and his inner circle in recent weeks, Iger — a longtime Democratic donor who has publicly criticized Trump’s first-term policies — does not appear to be among them.
Iger has managed to steer Disney out of a pandemic, a very expensive battle against the proverbial barbarians at the gate known as activist investors and, perhaps most heroic of all, managed to wring sustained profits from streaming. He now has two years left at the helm before he, in theory, retires for good and hands Disney over to the next generation of executives.
As in any good final act, the journey should, at the very least, be entertaining.
