News The Walt Disney Company Board of Directors Extends Robert A. Iger’s Contract as CEO Through 2026

Tha Realest

Tha Realest

Well-Known Member
Robbiem said:
To me if you buy something for 16 billion and sell it for 8 billion you are down 8 billion and have nothing to show for it so you’re going to have to sell even more or do something else to make good your loss.

You’ve effectively added eight billion to your debt as you don’t have the assets anymore but still have the outstanding liability so you’ve made a bigger problem down the line

If you own the thing that costs 16 billion you have the assets which are making you money over time (if this covers paying the cost debt is another question). That’s before you add in growing your presence in a new market with a lot of potential

The real questions to me are:
Why is Disney doing a fire sale like this? Is it to make a short term balance improvement to look good to the market or is it part of a longer strategic plan to withdraw from markets and focus on others (like China and the western world)?

How have Disney ended up in a situation where they have to sell at a loss to pay off debt Why didn’t they have a plan to pay off their debt when they bought Fox? And if they did what has changed since?
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Yes but Avatar did well
 
Dranth

Dranth

Well-Known Member
Trauma said:
I understand debt completely.

That’s why I don’t have any.
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Personal and business debt operate very differently. Nearly no company in existence operates without debt as increased leverage is often a good thing. Not so much for a person, but even then there are exception. For example, I could pay off my mortgage right now but why bother? That money earns me more investing in something safe like high yield savings or CDs so I would literally be worse off in the long run if I were to pay it off today.

Sure, there are lots of bad debt (I am looking at you credit cards) but that isn't the kind Disney has.
 
flynnibus

flynnibus

Premium Member
Trauma said:
No I’m saying I understand how debt works.
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But citing your own personal choice of how to manage it. No backing out of what you already said.

Trauma said:
The same “good debt” that Disney is currently carrying can turn problematic if conditions deteriorate substantially.

At the very least it could greatly reduce their flexibility.
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The debt they are carrying now largely is by choice and was done to GIVE them flexibility. The only issue is if their debt servicing load becomes problematic - which it hasn't proven to be, nor has Disney signaled any concern to it's investors about it becoming challenging (beyond the regular disclosures). The credit agencies have already done their thing pandemic impact and TCF impact. They aren't going to suddently wake up tomorrow and go "oh wait, Disney has 40b in debt? new downgrades!"

Their debt load is also down over 20% from 2021 already while their cash flow continues to get stronger. This is not some major area of concern. It's something that was done to manage the situations and has been done in way that hasn't impaired the business.
 
T

Trauma

Well-Known Member
flynnibus said:
But citing your own personal choice of how to manage it. No backing out of what you already said.


The debt they are carrying now largely is by choice and was done to GIVE them flexibility. The only issue is if their debt servicing load becomes problematic - which it hasn't proven to be, nor has Disney signaled any concern to it's investors about it becoming challenging (beyond the regular disclosures). The credit agencies have already done their thing pandemic impact and TCF impact. They aren't going to suddently wake up tomorrow and go "oh wait, Disney has 40b in debt? new downgrades!"

Their debt load is also down over 20% from 2021 already while their cash flow continues to get stronger. This is not some major area of concern. It's something that was done to manage the situations and has been done in way that hasn't impaired the business.
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A well thought out post. I will just make to brief counterpoints.

Firstly: I cited my personal experience for a reason. I may not run a billion dollar corporation but I am the founder and CEO of a multimillion dollar corp. I dislike people who try to make arguments from positions of authority so I don’t think that has and relevance.

Second : Your general assessment of the debt load for Disney is correct. However I feel like you are glossing over the context added of “If conditions deteriorate substantially”.
 
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T

Trauma

Well-Known Member
Lilofan said:
Getting out of debt requires a different lifestyle mindset to include sacrifices. The Millionaire Next Door or an oldie but goodie , The Tightwad Gazette are good readings.
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Yes but it’s a noble endeavor worth the sacrifice.

My daughter is leaving for college next year.

She will be graduating debt free. I also won’t be losing any sleep at night trying to figure out how to pay for it. It’s just a check I write. Just another number in a ledger.

That’s only possible because I don’t owe anyone anything.

Anyone who suggests you carry debt because you can invest at higher RoR, well just smile and ignore them. I promise your going to sleep just fine with your debt free lifestyle.
 
Vegas Disney Fan

Vegas Disney Fan

Well-Known Member
Dranth said:
Personal and business debt operate very differently. Nearly no company in existence operates without debt as increased leverage is often a good thing. Not so much for a person, but even then there are exception. For example, I could pay off my mortgage right now but why bother? That money earns me more investing in something safe like high yield savings or CDs so I would literally be worse off in the long run if I were to pay it off today.

Sure, there are lots of bad debt (I am looking at you credit cards) but that isn't the kind Disney has.
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Depends on the finances of the company, if you’re using debt to leverage equity into higher income it can be good, if you’re a struggling company using debt to stay afloat it’s not much different than the individual who is running up CC debt to stay afloat, short of a massive change in income it’ll eventually doom both.

Even multi billion dollar companies can, and have, overextended and doomed themselves with their debt load.
 
Dranth

Dranth

Well-Known Member
Vegas Disney Fan said:
Depends on the finances of the company, if you’re using debt to leverage equity into higher income it can be good, if you’re a struggling company using debt to stay afloat it’s not much different than the individual who is running up CC debt to stay afloat, short of a massive change in income it’ll eventually doom both.

Even multi billion dollar companies can, and have, overextended and doomed themselves with their debt load.
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Sure, that is always possible but in terms of Disney we aren't anywhere near needing to worry about something like that.
 
Sirwalterraleigh

Sirwalterraleigh

Premium Member
Robbiem said:
Pulling out of India now might bring in some short term cash but it looses a lot of potential down the line. India is a growing market and Disney has a good opportunity to build a good market presence. But that would be longer term planning for the post Bob era vs jam today
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It is short term cash…That’s the point and I’m 100% ok with it
 
L

Lilofan

Well-Known Member
Trauma said:
Yes but it’s a noble endeavor worth the sacrifice.

My daughter is leaving for college next year.

She will be graduating debt free. I also won’t be losing any sleep at night trying to figure out how to pay for it. It’s just a check I write. Just another number in a ledger.

That’s only possible because I don’t owe anyone anything.

Anyone who suggests you carry debt because you can invest at higher RoR, well just smile and ignore them. I promise your going to sleep just fine with your debt free lifestyle.
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Congratulations in making it happen in regards to your daughter will be debt free after college. My peer's kid is in a situation graduated from the US Naval Academy debt free , while getting paid approx $1K monthly courtesy of the US govt while at the Academy. He's stationed in Japan as a Marine officer living on base so he can even save more $$ for retirement.
 

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