Magic Kingdom Needs to Cast a Wider Spell; Disney's plans to double theme-park investment make sense but can't fully offset media struggles

The Happiest Place on Earth just got 60 billion reasons to be happier. But such is the nature of Disney's challenges that shareholders still aren't smiling.

Disney said it plans to nearly double its investments in its theme parks and cruise-ship businesses over the next 10 years. That will take the form of about $60 billion in capital expenditures over that period, going toward "expanding and enhancing domestic and international parks and cruise line capacity," according to a company's filing.

In a presentation included with Tuesday's filing, the company said it has more than 1,000 acres of land "for possible future development," but didn't specify if any new sites were planned.

The move is effectively Disney doubling down on its strongest business. The parks, experiences and products segment accounted for a little over a third of the company's total revenue for the 12-month period ended in June. It also accounted for 80% of Disney's operating profit over the same period.

The pandemic was certainly painful for a business that depends on masses flying in from afar and willing to stand in crowded lines. But those lines have more than refilled ; the combined operating margin for Disney's domestic and international parks reached 24% for the most recent 12-month period—4 percentage points higher than its average for the fiscal years 2015 to 2019 before the pandemic.

But Disney's shares still fell more than 3% Tuesday morning following the company's announcement. The company's filing—made in conjunction with a planned meeting for financial analysts focused on the theme-park segment—said little about cash needs for Disney's other businesses. It also said nothing about Disney's previously stated plan to resume a "modest dividend" by the end of this calendar year.

Disney suspended its dividend early in the pandemic to conserve cash, but it is now one of only three stocks in the Dow Jones Industrial Average currently not paying one, according to FactSet data. It probably didn't help matters that the news also came right after an actual bear was caught roaming Disney's Florida park.

Disney's present reality is such that even a strong theme-park business doesn't fully offset the more existential challenges faced by the company's much larger media side. Streaming was initially a salve for the movie theaters and live sporting events closed by the pandemic. But it has now accelerated cable-TV cord-cutting while not bringing in the same level of revenue to compensate. Disney's direct-to-consumer business lost nearly $3.7 billion in the most recent 12-month period, while revenue from linear networks has fallen on a year-over-year basis over the past four quarters. A recent battle with Charter Communications that took Disney's networks dark over that carrier was settled, but cast further questions on the future of the shrinking cable business.

The overall movie-theater market has also been slow to recover , and some of Disney's latest high-profile releases have fallen flat. The latest Indiana Jones outing called "The Dial of Destiny" has grossed only $174.5 million domestically since its June 30 release, which is ranking even below the originals released in the '80s on non-inflation adjusted figures, according to Box Office Mojo. And labor strikes have now crippled all of Hollywood, throwing the coming TV season and next year's movie pipeline into question.

Streaming, cord-cutting, falling movie-theater attendance and labor strikes are problems for Disney's peers as well. But Disney has been especially punished, with its stock now down about one quarter over the past 12 months, the second-worst performance in the S&P 500 Media & Entertainment group. Disney's parks are in good shape; it is the rest of the Mouse House that still needs potentially expensive work.