Disney’s earnings take a hit as pandemic wreaks havoc on theme parks business
Disney reported a profitable third quarter but missed analysts’ expectations as it battled the effect of coronavirus on its theme parks business.
Revenue for the quarter was $11.78bn, substantially less than the $20.35bn in the comparable period, and missing the expected $12.39bn.
Net loss from continuing operations was $4.72bn, or $2.61 per share, in the third quarter. This compares with a net profit of $1.43bn, or 79 cents per share, a year earlier.
However the entertainment giant unexpectedly posted adjusted profit per share of eight cents compared to the loss of 63 cents per share which had been anticipated.
As expected, Disney’s parks, experiences and products segment was hit by the pandemic, with revenue plummeting 85 per cent to $983m from $6.58bn. Analysts had expected $1.05bn.
In the three months to the end of June, Disney battled reduced attendance at its theme parks as global lockdowns forced their closure for most of the quarter. Disney reopened its Shanghai and Hong Kong theme parks during the quarter but shut its Hong Kong park due to a spike of coronavirus cases in the region.
Prior to the pandemic, the segment made up nearly half of last year’s annual operating profit. In May, chief financial officer Christine McCarthy said coronavirus could deal a $1.4bn hit to operating income in the third quarter, with most of it affecting its theme parks.
Disney’s studio entertainment business felt the effect of the pandemic after it was forced to delay the release of major films, including the widely-anticipated Mulan. Revenue fell 55 per cent to $1.74bn. Additionally a drop in advertising revenue on its media networks segment, including ESPN which is reliant on sport, also dampened its earning report.
A rare bright spot was the success of Disney’s streaming business through the pandemic. Disney Plus, ESPN Plus and Hulu each grew subscribers in the quarter, but the unit as a whole reported losses as costs rose.
Disney Plus reported its subscriber base had grown to 57.5m by the end of June, up from 28.6m since February.
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses,” chief executive Bob Chapek said.