Disney’s Credit Rating Has Been Downgraded Due To COVID-19 Impact
According to a piece that appeared this week in The Hollywood Reporter, Fitch Ratings downgraded the credit rating for the Walt Disney Company this week due to the impact the COVID-19 shutdown has had on the virus.
Analyst Michael Nathanson said, “The uncertainty index for Disney has never, ever been this high” after Disney reported on their Second Quarter Earnings during an investors call earlier this week.
The ratings were based on how The Walt Disney Company is expected to fair over the next two years. This means the company is going from an A to an A- rating with a negative outlook. This is due large and in part to the closure of its theme parks and retails stores due to the pandemic.
“Fitch’s rating action incorporates our expectation that the coronavirus pandemic will materially weaken Disney’s operating and credit profile through the remainder of the company’s fiscal year 2020 and into its fiscal year 2021, with shortfalls driven primarily by the Parks, Experiences and Products segment,” Fitch said Wednesday in a credit rating report.
In addition to the Fitch report, Moffett Nathanson analyst Michael Nathanson pointed to poor visibility for Disney’s future business metrics to judge when its theme parks, theatrical releases and other entertainment might return to normal operations.
“We have to train ourselves to look past those short-term annoying modelling questions and focus on the big picture and the long run. Yet, that, in itself, is a problem as the uncertainty index for Disney has never, ever been this high,” he wrote.
After the quarterly earnings report this week shares in the Walt Disney Company closed down 20 cents to $100.88.
This is a story that we’ll continue to follow here at MickeyBlog. Readers are encouraged to keep checking in for the latest news and updates!
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Source: The Hollywood Reporter