Running Head: ECONOMIC OUTLOOK
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Summary Business Valuation Report of
Walt Disney
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Output and Consumption
There are many trends and factors that are affecting The Walt Disney Company’s output
and consumption. Recently, a great impact has been seen on unemployment and Gross Domestic
Product (GDP) because of the arrival of the covid-19 pandemic on 2020. It has been identified
that GDP has directly impacted unemployment. The unemployment rate has increased with the
Falling GDP. Its effect can also be seen in The Walt Disney Company. This company has shut
down its work process, cruises, all major parks, and other entertainment facilities because of the
spreading coronavirus outbreak that has resulted in furloughed 77,000 employees (Guardian
News and Media, 2020). During this pandemic period, it has been seen that almost industries
were severely impacted that, has reduced their new content producing capacity. Thus, it can be
said that closing recreation parks and losing jobs in Walt Disney Company has resulted in
affecting the economic growth of the company.
Monetary and Trade Policy
The monetary and trade policies had a significant impact on the entertainment industry
because of the tariffs and other sanctions made against China. For instance, it has been identified
that the US tariffed $200 million on Chinese products with an additional threatening
tariff of
$300 million in 2019 (Guilfoyle, 2019). These additional sanctions can diminish potential profit
and affect release dates in case it does not get released in China. One great example of profit
from the Chinese market is the film Warcraft.
Therefore, it is important for The Walt Disney Company to build new attractions within
its entertainment parks and deal with trade issues related to the maintenance of the goods
purchases. Further, The Walt Disney Company has included multiple attractions like
“Galaxy
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Edge,” Harry Potter, and Star Wars-themed rides within the last several years (Guilfoyle, 2019).
As per the New york times report, a trade deal has been signed between China and the United
States in the first half of 2020. This deal has aimed to maintain its current tariffs by selling $200
billion in products to China from the US (Swanson & Rappeport, 2020). However, a 6%
decrease in imports has been seen by the US within the first 4 months of 2020 because of the
coronavirus outbreak. This can result affect The Walt Disney Company for the maintenance and
additions of its facilities and parks.
Policies and Regulations
Recently, the United States has decided to implement several new policies to help the
citizens and employees by focusing on the current economic status. During this pandemic period,
an important part is played by the CARES Act as it gave a stimulus package to every citizen
where they have provided a $1,200 cash sum with an additional $500 for children in 2020. For
instance, the State of Florida received 12 weeks of unemployment through the CARES Act. It
has been identified that the restrictions, regulations, and closures have resulted in the furlough of
100,000 employees for The Walt Disney Company, but the company has maintained its
employees’ health care for up to one year (Kelly, 2020). This has resulted to high cost for the
company.
Recently, the new health precautions and social distancing norms have restricted the
occupancy of amusement parks. According to Kelly, this entertainment business was going
through fewer profits because of the economic recession, new health precautions, social
distancing, and the lack of travel and crowd aversions until the availability of vaccines (Kelly,
2020).
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Industry Analysis
Supply and Demand
In January 2020, a trade agreement was signed by the Trump administration with China
with an aim to maintain the current tariffs and to increase its purchase of products by 6% every
year. However, this agreement is in limbo because of current China and the United States
relationship and the covid-19 pandemic. This has resulted in affecting the supply market to The
Walt Disney Company as well as the entertainment industry. The fact is the entertainment
industry is utilizing many of China’s exports for entertainment parks and movie production.
However, The Walt Disney Company’s expansion can get affected by Natural resources like
aluminium and steel in case the cost of supplies keeps increasing.
Further, it has been identified that The Walt Disney Company is rapidly leading in many
categories after a significant loss in revenue. The company is currently acquired 23.61% of the
market share for the cable industry and 13.97% of Comcast Corporation. However, there are
many other categories where the company is leading, but there is a need to continue the success
of Disney+, maintain parks and resorts, and continue major movie productions.
Regulation
The restrictions to go out during the pandemic period have hit hard the entertainment
industry. It has been identified that every single aspect of The Walt Disney Company parks and
productions has been impacted because of the restrictions like capacity limits and social
distancing. This restriction has also resulted in the furlough of the park employees and the
production of the shows and movies (Kelly, 2020). Therefore, these regulations have
downgraded the entertainment industry market as well as showing a significant loss of revenue.
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Employment Issues
The Walt Disney Company had to take a cruel step to furlough a huge number of
employees because of the closures and pandemics. The currently listed percentage for directors
and producers is at 5%, designers and multimedia artists are at 4%, and actors are at 1%. For
instance, more than an average of 11% has been seen by the persons working in the film, camera
operator, and video editors within the industry. Further, a competitive demand and supply of
capable employees have been seen. Thus, it becomes very important now for the company to pay
higher to their employees to keep them within the company.
Industry Outlook
In the past few years, The Walt Disney Company has faced many challenges and
obstacles, but still, it has maintained its competition in the entertainment industry. This company
has vast areas of income that include parks, studio developments, resorts, and a new streaming
service Disney +. This new streaming platform is presently competing with Hulu,
Amazon Prime, Netflix etc.
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References
Guardian News and Media. (2020, May 22). 'I can't get any help': Disney World Staff go
weeks without unemployment benefits. The Guardian. Retrieved August 6, 2022, from
https://www.theguardian.com/us-news/2020/may/22/disney-world-furloughed-workers-
unemployment-covid-19
Guilfoyle, S. (2019, May 28). Big bad trade war, earnings recession, trading Disney:
Market recon. RealMoney. Retrieved August 6, 2022, from
https://realmoney.thestreet.com/investing/big-bad-trade-war-earnings-recession-trading-
disney-market-recon-14972765
Kelly, J. (2020, April 24). Disney furloughs 100,000 workers, top execs get to keep their
jobs: Reports FT. Forbes. Retrieved August 6, 2022, from
https://www.forbes.com/sites/jackkelly/2020/04/22/disney-furloughs-100000-workers-
while-top-executives-will-still-get-big-bonuses/?sh=65c1039b5a96
Swanson, A., & Rappeport, A. (2020, January 15). Trump signs China trade deal, putting
economic conflict on pause. The New York Times. Retrieved August 6, 2022, from
https://www.nytimes.com/2020/01/15/business/economy/china-trade-deal.html
