Disney's Magic Kingdom Feels the Pinch as International Park Traffic Slips, Shares Tumble

By Dawn Chmielewski

LOS ANGELES, Feb 2 (Reuters) – The Walt Disney Company faced a rocky start to the week as its stock slid nearly 5% on Monday. The decline followed a sobering disclosure: growth at its powerhouse U.S. theme parks is cooling, particularly among international visitors, just as the company navigates a high-stakes leadership handover from longtime CEO Bob Iger.

The company pointed to "headwinds" with overseas guests without specifying a cause, coinciding with a broader dip in foreign travel to the United States. Chief Financial Officer Hugh Johnston noted promotional focus is shifting stateside due to "less visibility" into international travel patterns.

Disney's experiences division—encompassing its parks, cruises, and consumer products—remains the financial bedrock, delivering $10 billion in revenue and 72% of total operating profit last quarter. However, the emerging soft spot in international attendance raises questions about the resilience of this core business.

"The share price reaction is squarely about the parks," said Ben Barringer, technology research head at Quilter Cheviot. "Its sheer scale means any perceived weakness there will inevitably move the market."

The warning overshadowed a mixed financial picture. Overall revenue for the fiscal first quarter rose 5% to $26 billion, slightly beating estimates. Yet, operating profit for the entertainment unit (film, TV, and streaming) fell 35%, weighed down by hefty marketing costs for major releases like "Zootopia 2" and "Avatar: Fire and Ash."

In a sign of the evolving media landscape, Disney has stopped breaking out revenue for its traditional TV channels, a metric Johnston called "no longer relevant."

The company is simultaneously steering through a CEO succession. Iger, set to depart at year's end, has stated his goal is to set up his successor for growth. Josh D'Amaro, chairman of the experiences division, is widely seen as the leading candidate. "Succession has been an overhang on the shares," wrote Bank of America's Jessica Reif Ehrlich, adding that a D'Amaro appointment would likely be "well-received" given his division's performance.

The context for the park slowdown extends beyond Disney. Industry data shows a 6% drop in foreign visitors to the U.S. in 2025, with travelers opting for destinations like Spain, France, and Japan—a shift some analysts attribute to a combination of global economic trends and U.S. policy concerns.

Elsewhere in the earnings report, Disney's streaming services (Disney+, Hulu, ESPN+) showed strength with operating income jumping 72% to $450 million. However, its sports unit took a $110 million hit from a temporary blackout of ESPN on YouTube TV.

Despite the quarterly pressures, Disney reaffirmed its full-year forecast for double-digit earnings per share growth.

Reader Reactions:

Marcus Chen, Travel Industry Analyst in Orlando: "This isn't just a Disney issue; it's a U.S. tourism issue. The data is clear—travelers are choosing other destinations. Disney's domestic focus is a necessary short-term pivot, but long-term, they need a strategy to make the U.S. a more compelling destination again."

Sarah Gibson, Portfolio Manager at ClearView Capital: "The market is overreacting. The parks business is still immensely profitable, and streaming is finally turning a meaningful corner. This dip might be a buying opportunity for those who believe in the brand's enduring power."

David Keller, former theme park executive and industry blogger: "It's pure mismanagement. They've been milking the parks with relentless price hikes and dated attractions, assuming the 'Disney magic' was immune. Now international guests, who typically spend more, are voting with their feet. The board needs to wake up before this becomes a crisis."

Priya Sharma, Media Studies Professor at UCLA: "The earnings reveal the paradox of modern media conglomerates. They're strategically dismantling the legacy TV reporting that built them, while their future (streaming) and their past (parks) are on unstable ground. The CEO transition will define which path forward they truly commit to."

(Reporting by Dawn Chmielewski; Additional reporting by Harshita Mary Varghese; Editing by Edmund Klamann and Nick Zieminski)