D'Amaro faces tough questions about Disney's future
Josh D’Amaro takes another “first step” next week as Disney’s new CEO. On Wednesday, D’Amaro will run his first investors earnings call since taking over The Walt Disney Company’s top job.
Disney’s second quarter call was going to be a big deal, even without a new CEO in charge. The new war in the Middle East has disrupted the travel industry worldwide. It’s also raised questions about Disney’s Abu Dhabi plans – a project whose announcement gave Disney’s stock price one of its strongest boosts since the pandemic.
D’Amaro’s ascension to the top job also will raise questions about his vision for keeping Disney at the top of the Hollywood studio business, even as audiences continue to fragment and rivals struggle to attract viewers to theaters and streaming services. After all, the last time that Disney promoted its theme parks leader to CEO, well, that did not go well. (Sorry for the short stay at the top, Bob Chapek.) But Josh D'Amaro is not Bob Chapek, and Chapek did not have former Disney Entertainment Co-Chairman Dana Walden sitting beside him as Disney's President and Chief Creative Officer.
I am not a big-time Wall Street investor. But I will be listening for Josh’s responses on Wednesday to their inevitable questions about Abu Dhabi and the travel industry.
Disney’s deal with Abu Dhabi should be free money to the company. State-backed Miral is to pay for the design, development, construction and operation of a Disney-designed and branded theme park resort on Yas Island in Abu Dhabi. That destination is now home to the Theme Park Insider Award-winning Warner Bros. World Abu Dhabi and the best-in-class SeaWorld Yas Island, as well as the Ferrari World Abu Dhabi theme park and the Yas Marina Circuit Formula 1 track.
It’s a great multi-park destination, located just minutes from Abu Dhabi’s newly expanded airport. Former Disney CEO Bob Iger cited the high quality of the work that Miral has done with its existing attractions in convincing Disney leadership to partner Miral in its effort to serve a large and growing market of consumers and travelers in the Middle East.
The war, however, has cut off much of that travel. It also has created a spike in fuel prices that has made driving or flying anywhere around the world more expensive. Of all theme park companies, Disney is best insulated from a short-term spike in fuel prices. So many of Disney’s visitors to the Walt Disney World Resort and on the Disney Cruise Line book their vacations months in advance. They locked in their deals long before prices rose and are unlikely to cancel.
But what about the people who would be booking now for travel in 2027? That’s the question I want to hear Josh answer next week. Are Disney’s advance bookings down from what was expected before the war? Next year was supposed to be a big one for Walt Disney World, with Tropical Americas opening at Disney’s Animal Kingdom. I had suspected that Disney would see a relatively flat year in 2026 as many fans postponed Orlando vacations to wait for WDW’s new attractions in 2027 and beyond.
If high fuel prices are forcing guests to push back their plans even further, that’s bad news for Disney. The more people who book in advance, the less likely Disney will have to offer any discounts to fill its hotel rooms, cruise ships and theme parks. When people feel like traveling, Disney can charge some of the highest prices (and biggest profits) in the industry.
Despite all the uncertainty, Disney’s best action may be to do... nothing. Stay the course, with confidence that the company's recent bold decisions will work. The war may slow the typical lightspeed development pace of Emirati construction projects, but so long as Abu Dhabi has the money to complete a deal that has become a point of great national pride in the UAE, Disney has no reason to back out. To do so would send Disney’s stock price tumbling, as Disney would be conceding what should have been many millions of dollars a year in pure profit from licensing and revenue shares.
As for other theme park plans, there is no reason for Disney to back off from any of its planned new attractions around the world, either. If rising construction costs and lowered demand force short postponements, so be it. But let Disney’s competitors cut developments plans and suffer the future loss of market share that will result.
Josh D’Amaro is taking that call on Wednesday because he made a big play as Chairman of Disney Experiences. He asked for billions of dollars in investment for his segment, then delivered the strongest financial returns in the company in response.
The war is just the latest twist in the eternal string of challenges that business leaders face. Confidence has served Josh D’Amaro always in the past. I am hoping to hear more of the same when he faces tough questions about Disney’s present and future next week.
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The most interesting development that D'Amaro will need to explain during next week's call is holding onto ESPM. There were strong indications and insinuation from Iger that Disney was close to spinning the "Worldwide Leader" off as a separate entity to insulate their other broadcast and filmed entertainment products from the volatility of the current sports broadcasting market. It appeared that the long-predicted spin off would finally happen with a Parks and Experiences specialist taking the reigns, but perhaps as Robert notes that maintaining stability and playing things safe is going to be D'Amaro's M.O.