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If Netflix is one of the companies better suited to thriving within or despite the special circumstances created by the COVID-19 pandemic, Disney is certainly at the other end of that spectrum. With theme parks and retail stores temporarily closed, cruises suspended, and movie theaters shuttered, the media and entertainment giant from Burbank, California has been hit on multiple fronts by the ongoing crisis.
“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,” the company wrote in its latest earnings report for the quarter ended June 27, 2020. “We closed our theme parks and retail stores, some of which have now re-opened, suspended cruise ship sailings and guided tours and have seen an adverse impact on our merchandise licensing business. In addition, we have delayed, or in some cases, shortened or cancelled theatrical releases and suspended stage play performances at Studio Entertainment and have experienced an adverse impact on advertising sales at Media Networks and Direct-to-Consumer & International. We have experienced disruptions in the production and availability of content, including the deferral or cancellation of certain sports events and suspension of production of most film and television content.”
Taking all these adverse effects into account, Disney estimates the impact of COVID-19 on its operating profit for the quarter at $2.9 billion, as the Parks, Experiences and Products segment alone took a $3.5 billion hit. As the following chart shows, revenue in the segment that includes Disney’s parks, resorts and cruises, as well as its retail and product licensing business dropped by 85 percent to $1.0 billion in the three months ended June 27. Disney’s Studio Entertainment arm was also heavily impacted with revenues cut in half due to widespread theater closures.
Disney’s Direct-to-Consumer business, including Disney+, ESPN+ and Hulu was the bright spot in yesterday’s mixed earnings report. Despite Disney+ subscriber growth slowing down compared to the first six months after its launch, CEO Bob Chapek hailed the “tremendous success” of the streaming service, which will be rolled out to further European markets in September.
This chart shows Disney’s revenue in the quarter ended June 27, 2020.
