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Disney beats expectations as theme parks, stores reopen

Published: 04:14 13 Aug 2021 EDT

Netflix - The Walt Disney Company beats expectations as theme parks, stores reopen

The Walt Disney Company (NYSE:DIS) beat expectations with its third-quarter figures thanks to the reopening of theme parks and stores.

Revenue in the three months to 3 July climbed 45% to US$17bn, while the entertainment giant turned a US$923mln net profit from a US$4.7bn loss in the same period in 2020.

READ: Jungle Cruise: Disney’s latest strong opening lifts hopes for AMC and other pandemic-hit cinema chains

The Media & Entertainment Distribution segment saw an 18% jump in revenue, driven by a 57% increase in sales in the still unprofitable Direct-to-Consumer business.

That includes the streaming services Disney+, ESPN+ and Hulu, which have racked up nearly 174mln subscribers in total.

“We think Disney’s US parks breaking even this quarter is an important turning point… Global lockdowns unsurprisingly saw losses rack up in those parts of Disney that rely on packing thousands of guests into theme parks and cinemas all around the world. Fortunately, draconian cuts in production spend kept Disney’s mature, unglamorous, but suddenly vital, broadcast and cable TV arms in the black and that’s carried it through,” said Nicholas Hyett, analyst at Hargreaves Lansdown.

“Looking back at 2020 investors may even think that the pandemic provided a helpful backdrop for the launch of Disney+ - a service that would have otherwise had to go toe-to-toe with Netflix (NASDAQ:NFLX) in a far more competitive environment.”

“Still the need to fight off stiff competition in streaming probably explains why content spend has rapidly recovered as park losses narrow. Freed from the need to support shuttered parks, Disney’s creative studios are getting the cash injection they need to arm Disney in a streaming war that looks likely to hot up from here. Cable and broadcast can’t be relied upon to dig the group out of future scrapes as consumers increasingly turn to digital alternatives.”

Shares were up 5% to US$188.30 in pre-market trading.

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