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Tears for ears - Disney profits collapse as coronavirus closed theme parks, cinemas and sports

Published: 05:30 06 May 2020 EDT

The Walt Disney Company  - Tears for ears - Disney profits slump 90% as coronavirus closed theme parks, cinemas and sports

Walt Disney Co (NYSE:DIS) shares dropped 2% with Tuesday’s quarterly statement showing a near wipe-out for its financials, profits fell by more than 90% year-on-year.

Disney’s performance is particularly challenged by shut-up theme parks, closed cinema theatres and ESPN suffering as sports leagues are suspended.

A successful European launch of the Disney+ streaming service was only a small positive distraction for investors.

The Mouse House reported profit of US$460mln in the three months ended 31 March versus US$5.4bn for the same period in 2019.

Sales for the quarter 2020 amounted to US$18bn, compared to US$14.9bn generated in the comparative period of 2019 (which excluded most of the Fox businesses, acquired right at that end of that quarter).

Market consensus estimated earnings per share of 89 cents, which was missed with the actual figure coming in at 60 cents per share.

READ: Netflix sees ‘coronavirus boom’ as subscriber numbers soar

The group estimates it lost around US$1bn in the quarter due to the impact of the coronavirus (COVID-19) pandemic, yet it noted that prior to lockdown it had seen higher quarterly metrics for both guest volumes and spending compared to the preceding quarter.

Disney won’t pay the half-year dividend due in July, saving the group around US$1.6bn.

The results are the first released under new chief executive Bob Chapek, who was chairman of Disney Parks, Experiences and Product before, in April, replacing longstanding boss Bob Iger (who has remained involved during the COVID-19 crisis).

Chapek, on an investor call, revealed Disney plans to re-open the Shanghai Disneyland park on 11 May with capacity limits, mandatory face masks and temperature checking. Meanwhile, it is also considering options and scenarios for reopening its other parks.

Disney’s results came just a day after Star Wars: The Rise of Skywalker, the most recent cinematic title in the mega-movie franchise, was released globally across the Disney+ streaming platform, to mark the unofficial Star Wars holiday - May the 4th (be with you).

The evident success of Disney+ both before and during lockdown was the few positive features in Disney’s first quarter.

Disney’s proprietary streaming service, which is pitched to rival Netflix armed with market leading IP (with the catalogue of Disney, Pixar, Star Wars and Marvel content), counted 33mln subscribers at the end of March as it began to roll out in Europe.

A mid-lockdown launch into European markets subsequently saw subscriber number rise beyond 50mln in the first week of April, while the Hulu streaming service had 32.1mln subscribers.

For context, the most recently released stats from Netflix put its subscriber base at 182mln.

Disney’s direct-to-consumer & international division, which includes Disney+, saw revenue rise to US$4.1bn from US$1.1bn though the unit’s operating loss increased to US$812mln due to launch costs and the continuing consolidation of the separate Hulu streaming business (which was previously 60% owned by Fox).

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