When you think “Disney” theme parks and movies likely come to mind. Theme parks alone made up approximately half of Disney’s 2019 profits. So you can imagine how catastrophic the closure of theme parks and movie theaters has been to the house of mouse. Today, Disney gets specific with shareholders on just how bad the losses are and will give clues on what they are planning to do about it.
This is LIVE COVERAGE which we will be updated as the information comes in. Check back periodically for updates and thoughts on Disney’s disclosures.
Please note that Disney’s 3rd quarter results reflect the period of April through June of 2020.
Disney Financial Expectations
As we await Disney’s numbers to roll in over the next hour (full details on the live coverage now listed below), let’s look at what’s already been shared by Disney and financial experts. In May, Christine McCarthy, Disney’s CFO, projected a $1.4 billion hit to operating income in the third quarter due to the pandemic.
In a pre-call release, Disney reported earnings per share (EPS) from continuing operations for the quarter was a loss of $2.61 compared to income of $0.79 in the prior-year quarter! Earnings per share decreased 53%, that’s a MASSIVE decrease. But the company remains marginally profitable even in the pandemic with a huge amount of cash on the books as a cushion for uncertain future results.
Parks and Resorts will be the most deeply impacted with many of Disney’s parks closed during the bulk of the 3rd quarter. Shanghai Disneyland and Hong Kong Disneyland reopened during the 3rd quarter with Hong Kong later closing again.
Disney pictures was also severely impacted by the closure of theaters throughout most of the world in the quarter. Many of Disney’s major upcoming films have been repeatedly rescheduled and pushed back in the schedule.
Bright spots will be Disney+, broadcasting, and consumer products. Disney+ had reached nearly 55 million subscribers in May. In a pre-call release, Disney revealed 100 million Disney+ subscribers in the 3rd quarter, nearly doubling the previous quarter! Consumer products conducted multiple completely sold out product releases during the period, showing that Disney online shopping is extremely popular even with physical Disney Stores closed.
Disney Shareholder Meeting Live Coverage
This section was updated live during the investor call. The call began at 1:30pm Pacific time on Tuesday, August 4th and concluded about an hour later. Here are the highlights:
- Bob Chapek leads the call and admits a massive impact to financials due to the Covid-19 crisis, as well as a concern about social justice issues and Disney’s commitment to address them.
- He noted the restart of sports and the use of Walt Disney World for the NBA season.
- There are now 65 million paid subscribers for Disney+, 100 million total subscribers. With more markets coming soon. Those are TREMENDOUS results for Disney’s new streaming service.
- Here’s a screengrab from Disney’s press release showing the results in each business unit versus the same quarter last year, with HUGE losses in Parks and Resorts:
- Mandalorian received 15 Emmy Award nominations
- Mulan will be coming to Disney+ on a “Premiere Access Basis” September 4th. It will cost $29.99.
- Disney will be expanding it’s STAR brand to push more streaming options in the coming months. Those plans will be outlined later in the month.
- Disney can charge extra for premium content on both Disney+ and Star. (Our Thoughts: An extra streaming service means Disney can change for another subscription. We aren’t thrilled with that mentality considering they already have both Disney+ and Hulu brand which could accommodate those needs.)
- New Marvel and Star Wars content promised for Disney+ this fall. Including the 2nd season of the popular Mandalorian.
- In a bit of good news, Disney’s Cable Network revenues for the quarter decreased only 10% to $4.0 billion, but operating income increased 50% to $2.5 billion. The increase in operating income was due to increases at ESPN and, to a lesser extent, the FX Networks.
- Diluted earnings per share in the quarter were just $0.08 per share. At least they eeked out a small profit.
- An estimated cost of 1 billion dollars to keep cast, talent, and guests safe as a result of COVID-19 across all business units. Safety procedures, ramping production back up, extra days required to complete production, testing, etc.
-
The most significant impact in the current quarter from COVID-19 was an approximately $3.5 billion adverse impact on operating income at the Parks, Experiences and Products segment due to revenue lost as a result of the closures.
Parks, Experiences and Products revenues for the quarter decreased 85% to $1.0 billion, and segment operating results decreased $3.7 billion to a loss of $2.0 billion. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses and to a lesser extent, at our merchandise licensing and retail businesses.
- Disney furloughed over 100,000 people in parks and resorts.
- As a result of the pandemic, NO significant films were released in the quarter.
- Broadcasting and cable did well in the quarter and outperformed 2019. Partially because of lowered costs due to production shutdowns. Program expenses are expected to go up later in the year, offsetting these gains.
- Walt Disney World is operating at a modest profit but less than had been expected. Shanghai Disneyland is also net-positive.
- Capital expenditures are expected to be $700 million less than last year.
- The number of travelers to the WDW parks is much lower than expected, less than 20%. Disney trying to make that up on locals and passholders.
- 26 billion in cash on the balance sheet for emergencies. Disney’s credit facilities will allow them to continue operating regardless of how bad the pandemic gets.
THE CALL HAS ENDED
What Was Missing From Disney’s Investor Call
Shockingly, Disney did not address how they were planning to deal with current losses in Parks and Resorts. They did not mention future budget cuts, project delays or cancelations, or any other material information that investors would want to know. Nor did they mention how long they expect the recovery process to take or their assumptions on the state of the travel and entertainment industry. They stuck very closely to their financial disclosures and did not stray far from the facts without giving much guidance or business details in the Parks and Resort segments. The call seemed to focus heavily on the positive news from Disney+, streaming, and ESPN.
Let Us Help
Theme parks are reopening, and whether you are ready to travel yet or not, there’s no better time to lock in low rates on future travel. But waiting on hold and not knowing what questions to ask isn’t the magical part of a vacation. That’s why MiceChat has partnered with Get Away Today to handle all the difficult stuff for you . . . all for no extra cost. That’s right, they do all the work and it doesn’t cost you extra. Give your family something to look forward to:
- Visit Get Away Today HERE
- We are expecting high call volume as Disney resumes hotel bookings and tickets sales. So, please fill out our request form and a vacation advisor will call you back: Vacation Information Request Form HERE
Let’s Hear From You
Did Disney’s results shock you or were they what you expected? What do you expect Disney to do to recover from this financial crisis? Will highly anticipate projects be cut? Will prices go up? Let us know what you expect and what you would like to see Disney do in the weeks, months, and years to come.
You must be logged in to post a comment.