Why is construction still happening at Universal, but not Disney?

[CaptainAmerica]

I didn't blame him for the virus. I blamed him for his spend-happy habits, poor economic choices and the debt that's left the company in dire circumstances.

Regarding the past (and current) policies, successes, failures and blame for the current crisis, I will say this in favor of Bobbie I. He did pretty much exactly what every banker, analyst and business consultant told him to do. He went along with the Great Credit Bubble and borrowed, acquired and did stock buybacks. To da max. He was probably also advised to do as much business as possible in China and to build as many timeshares and cruise ships as possible.

The thing about a credit bubble is, it punishes prudent financial policies and rewards reckless behavior. And keeps on doing so ... until it doesn't any more.

And so, here we are.

Disney's debt-to-equity ratio pre-Fox was 0.3.
Disney's debt-to-equity ratio post-Fox was 0.4.
AT&T's debt-to-equity ratio is 0.8.
Comcast's debt-to-equity ratio is 1.2.
ViacomCBS' debt-to-equity ratio is 1.5.

Describing Disney as a debt-addicted, spend-happy company is just completely ignorant of the facts. They are an extremely conservative, cash-conscious company, despite the large acquisitions.

 

[splashtest]

And this is why the Construction at the New DVC resort continues. Get it done and make some $$ on it.

 

[Josh Hendy]

Disney's debt-to-equity ratio pre-Fox was 0.3.
Disney's debt-to-equity ratio post-Fox was 0.4.
AT&T's debt-to-equity ratio is 0.8.
Comcast's debt-to-equity ratio is 1.2.
ViacomCBS' debt-to-equity ratio is 1.5.

Describing Disney as a debt-addicted, spend-happy company is just completely ignorant of the facts. They are an extremely conservative, cash-conscious company, despite the large acquisitions.

This is good news for Disney fans.

Hypothetically, what would it do to Disney's D/E ratio if its operating earnings were negative with no definite date set for the resumption of normal operations, and if they continued to borrow in order to cover their cash burn rate?

 

[bartholomr4]

This is good news for Disney fans.

Hypothetically, what would it do to Disney's D/E ratio if its operating earnings were negative with no definite date set for the resumption of normal operations, and if they continued to borrow in order to cover their cash burn rate?

The company set up a line of credit recently. It has of yet, has not raised any cash from this line. So until they raise cash, there is no impact to the D/E ratio. The company could have issued bonds if they thought they would need the money long term. When they refinanced $6 Billion in bonds earlier this year, the offering was oversubscribed 3 to 1 (there were 3 bidders for every $1,000 bond). I think this is really just a security blanket for the company in case things get worse.

One addition step for Disney to consider, is suspend the dividend, which by itself is $3.0 billion a year. Prior to the 21CF acquisition the company repurchased $5.0 billion of stock a year, and has been paying off long term-debt at the same $5.0 billion per year. The company could also suspend those repurchases while this is going on.

The company has lots of assets and sources of revenue. It is going to take a hit, but has lots in its war chest to fight this financial drain in the near term. They just purchased land in Florida, so I am not sure they are in a "cash panic" as many think.

 

[JoeCamel]

The company set up a line of credit recently. It has of yet, has not raised any cash from this line. So until they raise cash, there is no impact to the D/E ratio. The company could have issued bonds if they thought they would need the money long term. When they refinanced $6 Billion in bonds earlier this year, the offering was oversubscribed 3 to 1 (there were 3 bidders for every $1,000 bond). I think this is really just a security blanket for the company in case things get worse.

One addition step for Disney to consider, is suspend the dividend, which by itself is $3.0 billion a year. Prior to the 21CF acquisition the company repurchased $5.0 billion of stock a year, and has been paying off long term-debt at the same $5.0 billion per year. The company could also suspend those repurchases while this is going on.

The company has lots of assets and sources of revenue. It is going to take a hit, but has lots in its war chest to fight this financial drain in the near term. They just purchased land in Florida, so I am not sure they are in a "cash panic" as many think.

I can see the stock buybacks stopping but if they can find the money the stock is cheap right now so they can buy more shares. The dividend cut would further tank the price and those with say 1.1million shares of DIS might not want to do that. Be one of the last cuts I suspect.

 

[bartholomr4]

I can see the stock buybacks stopping but if they can find the money the stock is cheap right now so they can buy more shares. The dividend cut would further tank the price and those with say 1.1million shares of DIS might not want to do that. Be one of the last cuts I suspect.

I agree completely.... To my last point I don't think they are in as much of a "cash panic" as many people think!

 

[CaptainAmerica]

The company could have issued bonds if they thought they would need the money long term.

They did. Disney issued $6 billion of new debt in addition to the $5 billion line of credit

 

[bartholomr4]

They did. Disney issued $6 billion of new debt in addition to the $5 billion line of credit

They used the proceeds of the $6 Billion to pay off $6 Billion which was coming due... it was in effect a debt swap.

 

[marni1971]

I agree completely.... To my last point I don't think they are in as much of a "cash panic" as many people think!

Very prudent would be a good phrase.

 

[plutofan15]

Very prudent would be a good phrase.

This. Extremely prudent around the globe. While the DW is not in the parks group, she does have good insight overall.

 

[007mickey]

It's unfortunate but Disney will pay more due to the temporary stoppage of these projects. I would think most g.c.'s will hit Disney for increased project general conditions (mostly time driven items that are not permanent components to the project. E.g., supervision, temp trailer rental, construction fence rental, equipment rental, etc.) and also re-mobilization costs. All those general contractors and subcontractors have moved workers to existing or new projects, to get them back to halted projects will incur expenses.

 

[marni1971]

All those general contractors and subcontractors have moved workers to existing or new projects, to get them back to halted projects will incur expenses.

It’s likely only a handful of current projects will continue.

 

[007mickey]

It’s likely only a handful of current projects will continue.

Are they going to abandon some in-progress projects?

 

[marni1971]

Are they going to abandon some in-progress projects?

Potentially.

 

[King Racoon 77]

Hopefully the stupid SW hotel will be cancelled permanently. Star Wars is over. Age, PC, and corporate greed killed it.

Er how about no . SW is far from over. The Mandalorion proved that. Yes the films have been oversaturated and badly planned but the right one properly handled would be a goldmine.

 

[ImperfectPixie]

Er how about no . SW is far from over. The Mandalorion proved that. Yes the films have been oversaturated and badly planned but the right one properly handled would be a goldmine.

Agreed. Hubby is familiar with most of the stories, and while he did enjoy Rise of Skywalker, he said the number of things they screwed up weren't worth counting. He experiences the same with many of the Marvel films because he's read most of the comics. I feel bad because I have the advantage of going into these movies with zero expectations.

 

[King Racoon 77]

I hear they have a special construction crew lined up

 

[trainplane3]

I hear they have a special construction crew lined up
View attachment 464230

Good idea! Disney owns them so it won't be any probl- oh nevermind, they're cancelled...again.

 

[Josh Hendy]

Went for a drive on Tuesday ... the transit construction project near my place is proceeding. Little groups of 2 or 3 workers standing around discussing things while another guy operates the crane or bulldozer ... no masks.

EDIT for clarity this is not Orlando or WDW

 

[Little Green Men]

Potentially.

Hopefully not Space 220