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Disney (DIS) stock is slipping alongside other media names after President Trump floated the idea of tariffs on internationally produced films. TD Cowen managing director Doug Creutz joins Morning Brief to discuss how potential tariffs could impact production costs.
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Take a look at Disney shares. Disney shares taking some losses today down a little over 1% along with other media and entertainment companies after President Trump suggested tariffs on films produced internationally. This coming just ahead of Disney's earnings on May 7th. And I want to bring in Doug Creutz, he's TD Cowen's managing director, covering media and entertainment. Doug, great to speak with you. I do want to start on these proposed tariffs. How are you thinking about modeling out the potential impact of these tariffs on some of these media companies including Disney?
Yeah, I mean, until something actually happens, uh, you know, the the tariff policy seems to change by the hour. So, uh, it's been thrown out there whether it actually happens or not is another question. Uh, the the companies do go outside the US to do a lot of film production and if if there really were tariffs, it would be something for them to consider. They could always move back into the US. Uh, I I think if Trump wants to go down that road though, then you do risk of having other countries tax US films coming into their markets, which is something I think Hollywood really wouldn't want. Um, so, you know, as of now again, this got thrown out there. It's not a policy yet and we'll see how it develops.
How much more expensive as we're kind of looking across the expenses and what's already known by analysts and investors to be the kind of baseline expense profile for Disney and the media entertainment part of their businesses as well as across the industry, what's already expected versus how much more expensive it could be if they were to need to produce films in the US versus where they currently do?
Well, first of all, you wouldn't need to produce them in the US. You could still produce them outside the US and eat the tariff, right? If it's a if it's a 10% tariff on a $200 million film, that's $20 million. You know, that still might be cheaper than doing it in the US. Um, you know, a lot of it is driven by incentives that are given by regions to, you know, basically they underwrite some of the cost of film production in order to bring the production there. Uh, there's there's lots of ways that that any tariff might be overcome by more of that. Um, so, like I say, I think at this point it's a little bit, uh, a little bit useless to speculate over what it could be. I I would say in general, though, um, you know, Disney's a huge company. Like if their films get a bit more expensive to produce, it's not going to have that much of an impact on the bottom line.
