BREAKING NEWS: COVID-19 Had a $1 Billion Impact on Parks and Experiences Division at Walt Disney Company
So, today was the day that investors have been biting their nails over for weeks. The Walt Disney World made their quarterly earnings report as expected and yup, the theme parks were hit hard! This resulted in the company’s earnings dropping 63% in the fiscal quarter.
During the second quarter of 2020 which captures the start of the COVID-19 pandemic, Disney recorded a $1.4 billion impact on its operating income. It’s Parks, Experiences and Products segment, with theme parks shuttered around the globe estimated a $1 billion revenue loss.
So was this damage offset by other segments of the company? Kind of. Though ESPN noted revenue loses and the studio group dropped 8% due to films like Onward being impacted by the theater closures, Disney+ expanded its reach launching in several European countries and India and now boasts over 50 million paid subscribers.
As a result of the meeting, shares dropped 63% to .60 cents for the quarter (below what analysts had predicted) but quarterly revenue grew 21% to $18 billion.
This was Chapek’s first quarterly earnings report since taking over the helm from Bob Iger rather unexpectedly earlier this year. During a call with investors, Chapek said, “While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position.” He added, “Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”
It should be noted that the earnings report doesn’t show the full impact of the COVID-19 closure. This will be reflected during reported for Quarter 3 seeing as the parks are still closed and cruise ships have suspended travel.
To combat the impact that COVID-19 would have on its business, The Walt Disney Company cut executive pay and conducted widespread furloughs of all non-essential employees. These changes have been in effect since April 19th. Around the same time, Disney also took at a $5 billion line of credit in order to boost its liquidity.
Now that the report is out, we expect news to be coming in thick and fast here at MickeyBlog. Readers are encouraged to keep following along and well keep you updated!
Source: The Hollywood Reporter