There is a big restructuring happening at iconic Walt Disney (DIS US) as CEO Bob Igor works hard to reinvigorate arguably the world’s most powerful entertainment conglomerate. Big is not always best and DIS needs to morph itself away from declining TV and cable revenues into other ‘growth’ areas. Our thesis for buying DIS US in September of 22 following a string of missteps that pushed shares lower, revolved around streaming, and their decision to create their own platform rather than provide content for others. A more costly approach but one if executed well would yield better returns over time. We believed the cash being thrown off from parks, which were performing well, and the earnings from traditional cable networks would fund growth elsewhere. This is all now taking more time and seems a lot more challenging, with the quicker-than-expected deterioration in cable now hindering their options, while Igor is now looking to sell ‘non-core’ assets, a sign that things are toughening further.
- We took an ~8% loss on our 5% position in DIS US overnight, moving the funds back to cash.
MM is now neutral on DIS US, having sold our position
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