2023-06-23 11:47:27
With their love for the Luke Skywalker, Darth Vader, Chewbacca & Co. franchises, Star Wars fans have ensured that this film series has become an incredible commercial success over the past few decades. In addition to films, video games or books, fans have also spent their money on bed linen, toys and countless other merchandising. But the fun seems to stop somewhere.
This “somewhere” seems to be the Star Wars hotel “Galactic Starcruiser”. After its opening on March 1, 2022, the gates of the hotel in Orlando, in the American state of Florida, will be closed again on September 30, 2023. Apparently, not enough fans of the sci-fi series were willing to shell out just under $5,000 for two nights and two people to get the full Star Wars experience. This included, among many other activities, training on a “spaceship” bridge, fighting with a lightsaber and visiting the bars of the Star Wars universe made famous by the films.
The fight against the escalating costs
One reason for the end of the hotel is the Disney entertainment group’s renewed fight against the escalating costs. This is led by longtime CEO Bob Iger, who returned last year. However, not only the Star Wars Hotel stands for the high expenses in the group. Rather, in recent years, Disney has taken on the battle with its competitor Netflix and other video-on-demand providers for market share in the online streaming sector, at great financial expense. Thanks in part to COVID-19 and a lockdown-related boost in demand for streaming services, Disney+ was initially successful in attracting customers. Recently, however, investors have increasingly focused on costs.
Among other things, it is the ongoing losses in the so-called direct-to-consumer business that have been weakening the Disney share price for several years. At the beginning of March 2021, an all-time high was reached at around 201 dollars. Most recently, prices were around $90 – a loss of more than 50 percent. The successes in the amusement park business after the reopening after the corona pandemic were not enough to calm investors. A first step seems to be the recently launched austerity program.
Arguing with a governor doesn’t do you any good
The austerity efforts apparently also include the deletion of a planned company campus in Florida. Originally, the cost point was around 864 million dollars. However, the New York Times reported that cost estimates were more recently in the $1.3 billion range. In addition, some employees may not have planned to relocate from the California headquarters to Florida to work in the new premises, as Disney envisaged.
FAZ.NET columnist Christoph Scherbaum is a stock exchange specialist and works as a financial journalist from Ludwigsburg. : Image: Christoph Scherbaum
Another aspect may have been the dispute with Ron DeSantis. The company has been at odds with Florida’s ultra-conservative governor since it criticized a law banning sexual orientation classes in elementary schools. This law became known as the Don’t Say Gay Law. Disney then canceled all campaign donations, while DeSantis in turn curtailed Disney’s special administrative rights around the “Disney World” amusement park.
Will cost cutting turn the tide?
As part of the latest austerity program, Disney is now targeting $5.5 billion in cost cuts. CEO Iger has already had some successes in the direct-to-consumer area. In the Disney+ streaming business, losses in the past quarter were “only” just under $700 million, after they had been $1.1 billion a quarter earlier. This also exceeded the market expectations of minus 850 million dollars. The work is not done yet. In addition to the CEO, it will now also be up to the new CFO Kevin Lansberry to report further savings. He had temporarily taken over the position of Christine McCarthy. She had taken a leave of absence for family reasons.
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Wells Fargo analyst Steven Cahall says the move is also an opportunity to make direct-to-consumer margin guidance more realistic, while first adding another twist to the media giant’s already complex history. He, in turn, currently believes the share price can jump to $147, while the rating is “Overweight”. Disney shares are currently trading at just under $89.
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