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Disney needs credit and deserved it

Disney needs credit and deserved it

He has built a range of entertainment properties like no other in the world, and he has an even older story than Mickey Mouse (he is 92 years old). So the legendary brand has fully earned the huge credit reserve it gets – moviegoers, vacationers, Broadway audiences, sports fans, many, many children.

And now … banks.

The media headline this week was that Disney had obtained a new one-year line of credit from Citibank, a $ 5 billion agreement to extend until April 9 of next year. The injection of liquidity aims to compensate for what society is facing due to the coronavirus pandemic: a plunge worse than that of Gaston on the parapet of the castle of the Beast.

In the short term, anyway, that’s where Disney’s revenue goes, all right.

The fall is completely inevitable, not because of everything Disney has done wrong, but just the opposite: Disney, under the leadership of its longtime chef, Bob Iger, has created a mass attraction empire. The masses are drawn to its incredible range of properties, and they almost always share it in droves. Unfortunately, fighting the scourge of Covid-19 has meant separating people from each other and, inevitably, from everything Disney does to make money.

Theme parks, of course, are in mind, every outing and animatronic creation is closed and silenced. But there are also the Broadway movies and shows that are supposed to be played in theaters (often the same stories repackaged in multiple forms, a distinctive Disney invention); and cruise ships moored and anchored, hotels now empty, Disney boutiques in each shopping center now closed.

The complete shutdown of all forms of sporting events is also particularly devastating for Disney, as its once titanic profit center, ESPN, already challenged by the reduction in cable operator fees through television on television – has been reduced to relaunch games from the recent and distant past (what could be better than watching a competition when you already know the outcome?) or hasty and half-cooked events as its NBA “H-O-R-S-E” Tournament.

With no certainty as to the resumption of live sports, ESPN even has nothing to say during its countless editions of “SportsCenter” – with the exception of the next NFL Draft, which has already been analyzed in more depth than the neurotic Elliot Carlin on “The Bob Newhart Show”.

The most dangerous days for ESPN may be ahead, with baseball and college football seasons under threat. How can a cable operator – or a subscriber – justify the payment of a monthly fee for a sports channel without sport?

The only arrow pointing up was the warm welcome from the new Disney + streaming service, which quickly gathered more than 50 million viewers. But this division will not generate profits to compensate for the bleeding in cash for at least several years.

Disney was put under surveillance by Fitch reviews, the outlook becoming negative, due to the impact of the pandemic. Like most Wall Street analyzes, the downgrade came with a confident prediction of a rebound when conditions rebound to “normal”.

No bank, certainly not Citibank, could miss the obvious need for Disney to protect itself with an infusion of borrowed money; nor have any reason to worry that the company is good for the money. Citibank’s most recent $ 5 billion was intended to inflate an existing credit nest egg. Disney previously agreed to a separate $ 5.25 billion one-year credit agreement with Citibank, in addition to a $ 3 billion five-year agreement.

This represents just over $ 13 billion in fallback for the company, a total that has perverse symmetry with the record film. Disney branded ticketing revenues in 2019. It also represented about $ 13 billion, a cause of celebration that may not be reassuring now.
The turn of events has surely created the biggest challenge that the most hardened Disney hero is still facing, Mr. Iger, magnificently adapted (but not capped). He had ridden in the saddle to ride in the sunset of the retreat just before the dreaded storm clouds gathered on the horizon of the world (and Disney). Iger announced in late February that the president of Disney Parks, Experiences and Products Bob Chapek to replace him as CEO. To crown this succession plan, Chapek has been elected to the company’s board of directors, Disney announced on Wednesday.
Now as shown in the New york times and elsewhere, it looks like Iger is going to have his CEO hat again to face the biggest crisis in the history of the venerable company.
It means deciding how many people will in vacations, lower wages or, at some point, let go. This from a company that was at the top of the media world at the start of the new year. Whenever a semblance of what used to be called real life resumes, this summit seems unlikely to be tackled again anytime soon. If ever. By anyone.
I have known Bob Iger since he took his first big job in entertainment in 1989 when he was a surprise (and clearly prescient) choice to become the chief programmer at ABC. What shaped it then has always stayed in place, according to everyone I’ve talked to about him throughout his long career, first at ABC and then at Disney.

He was an executive characterized by hard work, an attentive eye and an ear attentive to business transformations and a management skill, first in management, but later in the management of an expanding empire. He was also a charming guy, but always, always discreet. Sometimes during the interviews, you had to make an effort to hear it.

The word I heard most often about it was “unfazed”.

Perhaps he will remain so in the midst of a financial crisis that suddenly descended into a place that he had worked so ambitiously and diligently to shape an unprecedented power of media and entertainment. But Iger could also be forgiven if all of this untimely misfortune might make him beat a little.

source–>http://rss.cnn.com/~r/rss/edition_world/~3/YjkpVsvxnUg/index.html

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