Josh D’Amaro appears to be the frontrunner in the race to be Disney’s next CEO, and the Mouse House’s latest quarterly earnings showed why.
Disney’s experiences business, which D’Amaro oversees, is the backbone of a company that’s being weighed down by the struggling pay-TV business and isn’t yet lifted up by its streaming profits. And when that part of the business sneezes, the stock catches a cold.
Although the unit generated record profits, and Disney overall slightly beat Wall Street estimates on both revenue and earnings, the stock fell about 5% in early trading.
Investors seemed worried about Disney’s reference to “international visitation headwinds” at its US parks. Other possible factors driving down the stock were Disney’s year-over-year decline in earnings per share and its lukewarm second-quarter guidance.
Both the record experiences profits and the investor concerns underscore just how important D’Amaro and his fiefdom are to the company.
Bloomberg reported on Monday that Disney’s board of directors “is aligning on promoting” D’Amaro to replace longtime CEO Bob Iger, who’s planning to retire later this year. Business Insider could not independently confirm the reporting. Disney didn’t immediately respond to a request for comment.
Users on the prediction market Kalshi assigned Josh D’Amaro a 92% chance of becoming the next CEO as of Monday morning.
Dana Walden, who runs Disney’s entertainment and TV businesses, is widely seen to be the other top contender for the coveted CEO job. Walden has grown the streaming unit, which also turned in record profits in the last quarter. It’s crucial to Disney’s future, since traditional TV networks are losing their value due to continued cord-cutting.
Still, D’Amaro’s division is the profit-generating machine. Disney’s parks, cruises, and products accounted for more than 70% of its operating income, despite making up a relatively small slice of its revenue at under 39%. Jason Bazinet, a media analyst at Citi, said Monday on CNBC that almost all of Disney’s earnings underperformance last quarter came from the entertainment segment.
Bazinet added that “virtually everyone” on the buy side that he’s spoken to “would prefer that Mr. D’Amaro is named the new CEO.”
“Nothing against Ms. Walden, but people just like Mr. D’Amaro a bit more,” he said.
D’Amaro’s experiences segment has pulled off an impressive feat: consistently reeling in record revenue and hefty profits by making more money from each visitor, without alienating its biggest fans. The Mouse House has raised ticket prices for its US parks in each of the past four years.
Disney said per-person spending at its US parks rose 4% last quarter, though attendance only increased by 1%, due in part to a dip in visits from international guests. That means the company is making more per customer, in part by upselling through Lightning Lane fast passes. While Disney could risk losing lower-income or middle-class visitors if it keeps hiking prices, its results suggest that’s not an issue yet.
On Disney’s earnings call, one analyst remarked on how the parks business had gone from the worst part of the company’s portfolio to its profit engine.
Iger responded that he’s “very, very bullish” on the parks business, which has “never been more broad or more diverse.”
“We have a healthy competition now at our company, in terms of which of those two businesses is going to essentially prevail as the No. 1 driver of profitability for the company,” Iger said, in reference to the experiences and entertainment businesses — though he could also have been slyly nodding at the race between Walden and D’Amaro.
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