Media stocks have suffered recently due to declines in TV, newspaper and online advertising spend. Disney’s stock is less impacted by advertising declines due to the significance of its parks and resorts business. We estimate that Parks & Resorts (e.g. Walt Disney World Resort, Disneyland, etc.) constitute 28% of the $39.45 per share Trefis price estimate for Disney’s stock.
The parks and resorts business is dependent on the number of guest visits as well as the average guest spend. Disney had 68 million visits to its US parks and resorts in 2008 with an average spend of $105 per guest. About $30-$40 of guest spend is exposed to discretionary items such food, beverages and merchandising (toys, games, apparel). The remaining spend is attributable to admission ticket pricing which has recently gone up.
We have accounted for the unfavorable economic environment in 2009 by forecasting spend to remain flat at $105 per guest (discretionary decline offset by ticket price hikes) and guest visits to decline slightly to 67 million.
Within Disney’s content on our platform, you can see how Disney’s stock price remains resilient to fluctuations in US per Capita Guest Spend by forecasting further declines of $5-10 in spend.
