Disney sets key ‘leverage’ to fight recession impact as theme parks falter

Disney ( DIS ) laid out the key levers it can pull to help fight a potential recession — as the media giant’s theme parks business showed signs of weakness in the fourth quarter.

On earnings after the disappointing results, Disney CFO Christine McCarthy noted that the company has tools, new and old, that it can use to maintain its parks business if consumers pull back on spending.

According to the executive, one tool includes discounting — something McCarthy noted the media giant has used in the past as “an effective lever for performance management.” But he said the company won’t use discounts to the extent it did during the last recession in 2009.

Christine McCarthy, Senior Executive Vice President and Chief Financial Officer, The Walt Disney Company smiles as she speaks during the 22nd annual Milken Institute Global Conference in Beverly Hills, California, U.S., April 29, 2019. REUTERS/Mike Blake

Newer developments include an updated booking system that manages and tracks attendance, allowing the company more flexibility when it comes to making real-time adjustments.

He added that a seasonal tiered pricing structure, combined with a redesigned annual card business model, plus technology advancements on the checkout side (mobile ordering, contactless check-in), adds to that flexibility.

McCarthy noted that Disney permanently removed a significant amount of operating expenses at the parks during the pandemic, telling investors that the move “positions us better right now as we move through uncertain economic environments.”

The company said it will actively evaluate costs going forward and seek efficiencies to better streamline its operations.

Park operations miss expectations amid recession fears

Disney’s theme parks, which experienced a quick COVID rebound amid increased attractions, price hikes and updated technologies like the Genie+ app, missed expectations quarter as recession fears weighed on consumer demand.

Revenue from the company’s parks, experiences and consumer products division came in at $7.43 billion (vs. estimates of $7.59 billion), with operating income coming in at $1.51 billion (vs. estimates of $1.9 billion dollars.) The Shanghai Disney Resort remains closed amid strict COVID-19 protocol. The company revealed that it “has no visibility into the reopening date” for the Shanghai location.

Despite the setback, McCarthy said the media giant expects a “strong” holiday season at the parks in the first quarter of 2023.

Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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