How Disney makes its money

The state of Disney following its proxy battle

4/9/24 11:26AM

The calm after the storm

Disney has had a busy few weeks, as shareholders shot down activist investor Nelson Peltz’s effort to take board seats — re-electing Bob Iger and the 11 other company-backed members by a “substantial margin”, thus ending the most expensive proxy battle of its kind in history.

Hedge fund Trian Capital pointed to Disney’s costly Fox acquisition, faltering movie output, unprofitable streaming business, and bungled succession plans as evidence that shareholders might be better served with a board switch-up. As well as “right-sizing” its legacy media business, the agitators wanted “Netflix-like” streaming profit margins and more tangible targets for the $60 billion that Disney is still planning to invest in its parks business over the coming decade.

That level of commitment to its parks was certainly not guaranteed in the depths of the pandemic, when travel restrictions shuttered Disneylands around the world. But the division has since bounced back to become the company’s most profitable. Indeed, despite only accounting for 39% of revenue in Q1 2024, the “experiences” segment was the company’s profit engine, delivering 80% of total operating profit.

DisneyStoryLiving+

Disney has long been in the business of entertaining people, but it’s also looking at satisfying more basic needs. One such intriguing iron in the fire is its Succession-lite Living+ alternative — a slated “Disney town” in California called Cotino, where permanent residents will be able to blissfully revel in all things Mickey and Marvel.

Hyunsoo Rim

appy birthday

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The entrance of Allbirds seen from Hayes St. in San Francisco, Calif.

Allbirds, the once buzzy multibillion-dollar sneaker startup, is selling up for $39 million

That’s less than 1% of its peak market cap about four years ago.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.