Despite the novel coronavirus pandemic forcing closure of most of its entertainment parks all across the globe along with the closure of movie theaters and sporting events, Walt Disney Co managed to eked out an adjusted profit and avoid the unmitigated disaster hat was being fared by some investors.
Analysts’ expectations of a loss of 64 cents a share were easily beaten by Disney during the latest completed quarter as the company reported a quarterly profit of 8 cents per share on an adjusted basis.
The pandemic induced shifting media habits and its economic hit forced the company to take an almost $5 billion charge which effectively wiped off $3.5 billion in operating profit gtht the company generated from its parks business.
“The majority of businesses worldwide have experienced unprecedented disruption as a result of the pandemic,” Disney Chief Executive Bob Chapek told analysts. “Most of our businesses were shut down, and this had a huge impact.”
Analysts and investors were apparently not too concerned about a drop in total revenues of the company which was short of expectations of the market by almost $600 million and instead gave importance to revenues generated by separate division of the company including parks and its media networks, where the drop in revenues were better than was being expected by the market.
Chapek said that during the quarter, the bright spot in the performance of the company was its Disney+ streaming service that had 60.5 million paying customers as of Monday. Disney had reported 54.5 million subscribers as of May 4.
“What we plan to do is invest even more in our content in order to keep that machine cranked and going,” he said.
Since launching of its big streaming effort nine months ago, more than 100 million streaming customers worldwide have been accumulated by Disney, when the strength of Disney+, Hulu and ESPN+ are considered.
There are 193 million paying subscribers of Netflix Inc since it was launched about 13 years ago.
The theatrical debut of movies including the live-action epic “Mulan” about a Chinese warrior were pushed back by Disney because of the coronavirus pandemic outbreak.
In a move that surprised the market, Disney said it will release “Mulan” on Disney+ on September 4 aimed at people who watch at home at a cost of $30. It will also be released in theaters in markets where Disney+ is unavailable.
Chapek said the shift was a one-time event and did not represent a shift in strategy.
The company was allowed to release films directly to consumers after just three weeks in theaters, compared to an average time period of three months, after a deal in July between Comcast Corp’s Universal Pictures and cinema chain AMC Entertainment Holdings Inc.
A new international streaming service under the Star brand would also be launched by it, Disney said.
“Investors are looking beyond the tough quarter to continued reopening of parks, while Disney+ is expected to see further growth,” said Investing.com analyst Haris Anwar.
(Adapted from BusinessWorld.in)