Today's New York Times takes a look at Disney's recent successes and questions whether the growth can be sustained in the face of a slowing ecomomy.
The article by Brooks Barnes highlights how The Walt Disney Company managed to weather the storm during the final years of Michael Eisner's tenure and sustained the growth two years into Robert Iger's term. But now there may be reason for concern.
Disney’s stock, after soaring over 20 percent in early 2006 because of Mr. Iger’s deal-making and corporate reshaping, has stalled of late. Shares of Disney, battered by overall market weakness in addition to concerns about 2008, fell 72 cents, to $32.02 on Monday, about flat from a year earlier.
In comparison, the Dow Jones industrial average — and Disney is one of the 30 Dow stocks — has risen about 7 percent in the last year.
Disney execs disagree with the dire assessment, pointing out that the television unit was prepared for the current television and film writers' strike (i.e. stockpiled episodes of "Lost" and reality shows) and that it will be a year before the film unit would be impacted. They also noted the dollars recently committed to enhancing the theme park and cruise line units:
Among Disney’s building projects is a $1 billion overhaul of its long-struggling California Adventure theme park in Southern California. (“Let’s face it, we had a problem,” Mr. Iger said.) Disney is also building two new cruise ships and a luxury resort in Hawaii.
Analysts disagree on the impact a recession would have on Disney's theme parks, with some suggesting that success is not as dependent upon the ecomomy as it was in previous years. Growth of the Disney Vacation Club, which guarantees a certain level of attendance at the parks regardless of the economy, may help fuel the optimists' argument.
Source: The New York Times
