Two years ago, the market was valuing Walt Disney Co at nearly US$370 billion, or more than Walmart Inc, the world’s top retailer, and JPMorgan Chase, the most valuable bank on earth. Now, Disney is valued at less than half of that. Despite all its great legacy assets, the Kingdom is no longer seen as magical by investors. Disney, which turns 100 in October, looks like a stodgy old media firm that is struggling to pivot to streaming as viewers cut the cord on expensive cable TV bundles and shun movie theatres for home viewing shows on streaming pioneer Netflix.
There is turmoil in the Magic Kingdom. The home of Mickey, Minnie, Goofy, Ant-Man and Chewbacca is under siege. Activist hedge fund managers who have seen the world’s second-largest entertainment firm’s stock plummet 50%, from the height of the pandemic in March 2021 to US$100 ($131.25) currently, smell blood and are raring to pounce. The intruders want the keys to the door of the Magic Kingdom so they can “unlock” value.
Clearly, there is a lot of value in the House of Mouse. Its Avatar: The Way of Water recently topped US$2 billion at the global box office. Disney owns resorts and theme parks in Shanghai, Hong Kong, Tokyo, Paris as well as Florida and California, a fleet of luxury cruise liners which each cost more than half a billion US dollars to build, two of the world’s highest-grossing movie studios, broadcasting network ABC, the world’s biggest sports network ESPN, a growing consumer products division that sells Baby Yoda toys, food, books and console games, one of the most sought after archives of filmed entertainment, and the world’s No. 2 video streaming platform, Disney+.
