When researching the Walt Disney Company, it has been obvious the company has significantly invested a lot of their future into the burgeoning online streaming service Disney Plus

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When researching the Walt Disney Company, it has been obvious the company has significantly invested a lot of their future into the burgeoning online streaming service Disney Plus.  With the streaming service set to run at a loss well into 2024 Disney will have to rely on other business segments to maintain the company's financial health and provide enough cash flow to pay the interest on the large debt that the company has taken on.

A look at the Disney financials shows that the company generates over 75% of their profit in North America with 70% coming through the Parks/Resorts and Media segments (Disney, 2018).  With this in mind it is clear to see that the company must try to ween themselves away from being so dependent on the North American market.  Therefore my investment recommendation would be to build a Disney Park and resort in Mumbai, India. 

There are several pros to this opportunity, the first of which is being able to lean into what is already a core competency of the company.  Theme Parks and resorts have been Disneys bread and butter sine the first park was opened over 50 years ago.  With the cost of labor and building cheap, the cost to build such a park/resort would be relatively low while at the same time allowing the company to tap into what is a rapidly expanding middle class in one of the worlds largest countries and fast rising economies.

Ultimately the biggest issue I see with such a venture is the initial start up cost and the time needed to build and establish the resort.  As mentioned previously, the company already has a large debts from recent acquisitions so taking on more would be unwise at this time.  Linked to those debts are the large interest payments that the company faces, payments that take a considerable bite out of the free cash flow the company would be able to reinvest into a park expansion opportunity.  With this in mind and the company so heavily leveraged in pursuit of their online business/presence, taking on further debt or use of free cash flow would most likely be unwise at this time.