Disney lost $1.4 billion due to coronavirus last quarter

Walt Disney Co.’s latest financial results reveal just how badly the coronavirus has walloped the entertainment giant. The company on Tuesday said the total loss across its theme parks, retail stores, TV operations and other units amounts to $1.4 billion, while its earnings fell by more than half. 

Most of the damage, or $1 billion, was to the company’s theme park in California and Florida, the company said in releasing second-quarter earnings. Overall revenue rose to $18 billion, up 21% from a year ago and in line with analyst forecasts, but that was dressed up by its previous purchase of 21st Century Fox’s entertainment assets. Disney’s earnings fell 91% to $475 million, down sharply from $5.4 billion in the year-ago period. 

“The impact of COVID-19 and measures to prevent its spread are affecting our segments in a number of ways, most significantly at Parks, Experiences and Products where we have closed our theme parks and retail stores, suspended cruise ship sailings and guided tours and experienced supply chain disruptions,” the company said in a news release.

Disney World and Disneyland closed March 14 as the coronavirus was spreading across the U.S. Days later, Disney-owned cruise ships docked and still haven’t set sail. The company’s retail stores and theater shows also have closed. 

Disney hasn’t announced when it plans to reopen its U.S. theme parks. In a conference call with analysts, CEO Bob Chapek said it plans to reopen its Disney Shanghai park on May 11.

Analysts said Disney is in a difficult position when it comes to reopening theme parks. If parks reopen too soon, Disney could lose money if attendance is weak, said Richard Greenfield of LightShed Partners, in a research note ahead of Disney’s latest quarterly report. And if the parks remain closed, the company is paying monthly expenses for the space without generating revenue. It “feels like a lose-lose,” Greenfield said.

Devastating impact

TV production at Disney-owned ABC has been delayed and release dates for movies, including a live-action remake of Mulan, have been postponed. Disney could release films sooner to help boost revenue this year, Greenfield said. 

The loss in revenue has meant pay cuts from top to bottom at Disney. The company slashed pay for Chairman Bob Iger and CEO Bob Chapek in half. The company also furloughed some 43,000 Florida-based employees last month. 

“The COVID-19 pandemic is having a devastating impact on our world with untold suffering and loss, and has required all of us to make sacrifices,” the company said in a statement last month. “Mandatory decrees from government officials have shut down a majority of our businesses.”

By contrast, the Disney Plus streaming service, which launched almost six months ago and now has more than 50 million subscribers globally, could continue to grow as Americans hunker down under stay-at-home orders. The new service contributed to an almost $3 billion revenue increase for direct-to-consumer and international business.

—The Associated Press contributed to this report.

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