Now that the Disney Parks are closed indefinitely, Disney has been preparing itself for what could be a very long road ahead.
And while the company’s major streams of revenue have been suffering, Disney is bolstering itself with other, more subtle moves these days.
Since almost every facet of The Walt Disney Company is currently being interrupted right now due to the global situation, the team in charge has been forced to figure out other ways to stay afloat. Let’s take a look at steps execs have taken to protect the Walt Disney Company.
How is Disney Mitigating Loss During the Closure?
Inside the Disney Parks
The Disney Parks are a primary source of income for Disney, and each day they sit closed the company is losing millions upon millions of dollars. Disney leaders have had to make some tough decisions very publicly in order to protect the future of the company, and the parks — usually a cash cow — are taking a hit.
At the time of the park closures, Disney chose to halt construction throughout the parks.
Then, in an effort to reduce Disney’s payroll costs until the parks can safely reopen, Disney furloughed its non-essential Cast Members, which led to public negotiations on the terms of the furlough with some of the unions that represent various Cast Members.
Outside of the Disney Parks
Other areas of the Disney Company have also begun to feel the pinch. Walt Disney Studios has also had to furlough its non-essential employees. And we’ve seen Disney’s highest-paid executives take pay cuts during this time.
Behind the Scenes Moves
That’s all been happening in the foreground, but let’s examine what Disney has been doing a little more behind-the-scenes.
Raised Over $6 Billion in Funds
According to The Hollywood Reporter, The Walt Disney Company has raised over $6 billion in loans recently. The information was originally disclosed in a filing with the Securities and Exchange Commission in late March shortly after the parks shut down.
The company filed five different notes, set to mature between 2025 and 2050, with values of between $500 million and $1.75 billion and interest rates between 3.35% and 4.7%.
When registering, Disney stated it intended “to use the net proceeds from the sale of the notes for general corporate purposes, including the repayment of indebtedness (including commercial paper).” This means they could use the funds to pay down past loans if need be.
At the close of last year, The Walt Disney Company was already carrying $38 billion in debt. In addition to Disney, other major companies such as Coca-Cola, Exxon, Pepsi, and Verizon have all quietly taken on substantial debt during this time.
Rolled out Disney+ in Western Europe Almost Two Weeks Early
Disney’s digital platform was launched here in the States on November 12th, but Western Europe wasn’t expected to launch Disney+ until March 31st.
But on January 21st, Disney inexplicably moved the release ahead to March 24th. On January 23rd, just days later, Shanghai Disneyland announced it would be closing. The timing might have been merely a coincidence, or it could have been strategic on Disney’s part.
Since launching in eight Western European countries including the United Kingdom, Ireland, France, Germany, Italy, Spain, Austria, and Switzerland, Disney+ has surpassed over 50 million subscribers.
In addition to providing a steady source of revenue to the company, it’s also given investors a brighter outlook on how The Walt Disney Company is faring these uncharted waters as a whole. The day after news broke that Disney had hit its 50 million-user milestone, Disney stock surged.
Disney has made further use of its new live-streaming service as a vehicle for releasing new content well before they had originally intended to do so. Frozen 2 was added months ahead of schedule as was the movie Onward, which had been released in theaters right as many theater chains began to close down.
This came at a loss to Disney’s box office revenue, but with so many people stuck at home right now, it showed tremendous goodwill to offer these surprise releases on Disney+. Their decision to do so most likely garnered them even more subscribers!
Bought More Land Near Disney World
Through Celebration Co. (a company with a known connection to Disney) Disney World recently acquired an additional 26.3 acres for $1.05 million. The deal happened on March 31st and the area is located to the west of Magic Kingdom, near the southeastern shore of Reedy Lake. They purchased this land from Lake Reedy Development Group LLC.
While it may seem like a strange time for Disney to be buying land, especially with the amount of debt the company has just taken on, land is a concrete asset for Disney to have in their back pocket right now. Land in this area will likely retain or grow its value over time. At a later date, Disney can either choose to build on the property, leave it undeveloped to preserve its natural “barrier” surrounding Disney World, or sell it to another buyer if they see fit to do so.
Either way, it’s yet another subtle way Disney is investing in its future.
These next few months will continue to be challenging for Disney. Deciding when it will be safe for Cast Members and guests to return to the parks is just one of the many tough decisions Disney will have on its plate. We, along with the rest of the world, we will be watching to see how Disney responds.
And while we’re expecting some of the actions they will be taking will be large and broadly publicized, we’re watching carefully for the smaller, more delicate ways Disney is securing its future. Be sure to sign up for our newsletter to stay in-the-know with all Disney news as it develops!
What do you think of Disney’s decision to purchase land recently? Does it make financial sense to you? Let us know your thoughts in the comments below.