Walt Disney Co.’s quarterly report reveals the painful toll the COVID-19 pandemic has had on the entertainment juggernaut. Disney’s profit plunged over 90% during the second quarter, with execs saying that the pandemic cost the company $1 billion of profit from their theme-park division alone. But the company was still profitable.
Breaking Down the Numbers
The Q2 report sent Disney stocks tumbling, falling over 2% in after-hours trading. Below are the main results as watched by Wall Street:
- Adjusted earnings per share: 60 cents vs. 86 cents expected, $1.61 Y/Y
- Revenue: $18.01 billion vs. $17.68 billion expected, $14.92 billion Y/Y
Though Disney reported a jump in second-quarter revenue from last year, earnings plummeted as the coronavirus pandemic dealt a blow to some of the company’s most reliably profitable segments.
What Caused This Rocky Performance?
Because Walt Disney Co. operates in so many markets, the pandemic’s effect on the company is multifaceted.
The most visible consequence of the pandemic has been the closure of Disney theme parks across the globe. Parks in Orlando, Anaheim, Paris, Shanghai, Tokyo, and Hong Kong attract hundreds of millions of vacationers each year. While the Shanghai Disneyland Park will reopen to the public on May 11, all other parks remain shuttered indefinitely.
Disney’s cinematic arm has also taken a beating as the company has pushed back theatrical releases for several blockbusters, like Mulan and Black Widow. That’s revenue postponed. And while Disney+, the at-home streaming service, is attracting more viewers than ever, production of new TV shows and films remains on indefinite hiatus.
Other Disney ventures that have been hurt amid the crisis include Disney retail stores and Disney cruises.
Some Beacons of Hope
Disney’s media network division performed surprisingly well, despite a huge hit to ESPN, which has struggled to attract viewers as sporting events remain canceled. Operating income for this business segment grew 8.7% to $2.38 billion, thanks largely to the success of the Disney+ streaming platform.
Disney’s Chief Financial Officer Christine McCarthy also announced the company will be forgoing its semiannual dividend payment to save money. While this might seem like bad news for investors in the short-term, the move is expected to give the company $1.6 billion in cash that will help it weather the duration of the pandemic. Disney’s capital expenditures will also be down $400 million.
