How will higher tariffs impact family entertainment powerhouse Disney (NYSE:DIS)?

We asked Seeking Alpha analysts Jonathan Weber and Daniel Jones for their thoughts.

Jonathan Weber: While some of Disney's business units should be relatively immune to tariffs, such as video streaming, there will be an impact in other areas, e.g. in its (physical) consumer goods business. There could also be secondary effects -- if people worry about a tariff-induced recession, they may decide to forego expenses such as theme park visits, and trade tensions with other countries could cause less tourism, which could impact Disney (NYSE:DIS) as well.

Daniel Jones: For now, the tariff situation appears to be in limbo. There is currently a 90-day pause on tariffs for most countries, during which tariffs will remain flat at 10%. Even an entertainment behemoth like The Walt Disney Company (NYSE:DIS) could be negatively affected if the tariff situation gets out of control. 

One advantage the company has is that most of what it provides to its customers are services as opposed to products. Total products amounted to $9.52B last year, but that only amounts to 10.4% of the company's overall sales.

The big risk for the company is that the tariff situation could turn out to be highly inflationary in a way that this country and the world has not seen in quite some time. For the most part, Disney (DIS) is viewed as a premium product, and premium products can face pressure when consumer budgets become constrained. It is true that some of the company's revenue is in the form of low-ticket items such as its streaming services. But other parts are at the higher end of the spectrum. 

A good example of this is its theme park business. In 2024, $11.17B of the firm's top line was associated with theme park admissions. Resorts and vacations accounted for another $8.38B. The firm generated an additional $2.26B in park licensing and other fees. Earlier this year, news broke that Disney executives were already concerned that price increases at its parks over recent years have weakened attendance.

According to one source, a family of four visiting Walt Disney World should expect to spend between $2,200 and $3,400 for a weekend trip. For families of six, you are looking at between $3,700 and $5,800. When you consider that the median household income in the US was $80,610 in 2023, we are looking at a pretty significant chunk of a family's revenue for a simple weekend. 

If we are talking about a week, the picture becomes even more drastic. A family of four can expect to spend between $7,200 and $11,000 over the course of a week. And a family of six can expect to spend between $11,900 and $19,000. One source found that 24% of consumers who have gone to a Disney theme park have gone into financial debt to fund the trip. For consumers who have young children, that number jumps to 45%. 

If tariffs usher in higher prices, as they almost certainly will, a constrained consumer could have a negative impact on the company.

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