I offered up a few predictions for Walt Disney (DIS -1.12%) investors earlier this week. I'll be the first to concede that I didn't go out on much of a limb.
- Predicting that Disney+ will grow its subscriber base in 2023 despite a recent 38% price hike? Bah humbug. The leading streaming service has seen its most popular plan nearly double in price through six price hikes since 2014. Its subscriber base has grown fourfold in that time.
- Calling for Disney shares to move higher next year? After back-to-back years of double-digit percentage declines, it better.
- Suggesting boomerang CEO Bob Iger will extend his two-year tenure by the midway mark? Of course. There's no way he can turn things around in just a couple of years.
You want more brazen forecasts? You want the kind of crystal ball gazing that will make heads turn and give bloggers ammo? I hear you. I'm putting on my mouse ears. Let's get to some risky and highly-unlikely-to-pan-out predictions for Disney stock in the year ahead.
Image source: Disney.
1. Disney World will announce a fifth theme park
It's been a long time since Disney opened a new theme park in central Florida. The media giant introduced its first four gated attractions between 1972 and 1998. It never went more than 10 years between unlocking the turnstiles of a new gated attraction. It's now been more than 24 years since Disney's Animal Kingdom made its debut.
Disney World is due for a new park, and in three years it will be long overdue. Rival Comcast is on track to open Epic Universe as part of its Universal Orlando resort in 2025. It should be a bar-raising destination, immersing guests deep into several iconic franchises with thrills and richly themed experiences.
Theme parks can drum up attendance with a new high-end ride, but Disney won't be able to compete with an entirely new park loaded with next-gen attractions that will woo guests away from its central Florida resort. It's too late for Disney to take Epic Universe head on. If it breaks ground on a new park now it won't open until 2027 or later.
Disney has denied a need for a fifth park, but anyone who has visited the resort in recent months will tell you that the existing offerings are crowded. The world's largest theme park operator is actually turning guests away, resorting to a park reservations system to make sure it optimizes revenue of the patrons it does let in. The recent staffing challenges are a problem, but it will be a different world by 2027. Comcast obviously feels it won't have a problem staffing Epic Universe three summers from now.
One can argue that Disney would be better served to announce that a new park is coming closer to the grand opening of Epic Universe, but in a world of permits, helicopters, and drones, it won't be able to keep a potential new park secret for long. Why not announce it in March 2023 when it reaches the end of its 18-month celebration of the resort's 50th anniversary? If not, there's always the Destination D23 expo in September, taking place in -- yes -- Disney World.
2. Disney won't unload ESPN
With Disney shares in a two-year funk and Disney+ a major drag on its recent performance it's easy to see where Iger needs to turn to shave costs. It's spending too much money on content, and a big line item here is the programming costs that ESPN is paying for live sports.
Disney owns 80% of ESPN, and some activists were suggesting that Disney spin off or just sell ESPN. I don't see that happening. Pro and college sports matter to streaming services. The best sporting events continue to attract juicy ratings. It's the one bastion of legacy media that still works. It's not a surprise that tech giants with fledgling streaming services to feed were the finalists for the NFL's Sunday Ticket rights in the bidding war that ended last week.
There's no denying that Disney is the top dog among media stocks when it comes to intellectual properties. It was Iger himself who shook hands with Pixar, Marvel, and Lucasfilm to build on Disney's homegrown strengths. He knows that sports can be a loss leader, but he also knows how valuable it is to win eyeballs. Iger may wind up unloading some lesser-known cable properties -- while they still have some value -- but he's not going to loosen Disney's grip on ESPN.
