Question

what problems has Disney had with currency exposures losses?

Answer 1

The losses were basically due to increase in value of dollar against some other currencies. Disney is one of the biggest multinational corporation, and is taken as one of the top tier organization in the world. With billions of dollars of assets they have, an organization like Disney possesses distributed and different assets in different parts of the world. For example, yet Disney owns several media franchises involving movies and televesion series in US, but the merchandise (consumer products) are distributed in nations where the production is cheaper relative to US (one may assert that cheap labor play important role in these decisions).

In 2015-2016, Disney had a loss of about $500 million due to currency fluctuation. Specifically in Venezuela (where one my suppose labor is much cheaper), Disney had a loss of $143 million, which happened as value of dollar increased relative to Venezuelian currency (Venezuelan Bolivar). The currency fluctuation happened due to economic crisis in that nation, but that effected the value of the assets residing within the nation, which caused Disney to lose millions of dollars. This same kind of fluctuation occured in different nations, as value of dollar increased, the valuation of assets of Disney reflected the loss. In a nutshell, the dollar appreciation with repsect to different nation's currencies caused the valuation of assets to decrease in dollar terms, which was reflected in currency exposure losses of Disney. Note that this loss was only a part of the change in revenue, as the other sources of revenue behaved independently to this event.