In a pleasant surprise, Walt Disney Co has reported a quarterly profit after “The Mandalorian” and “Soul” lifted growing streaming business, outweighing pandemic concerns over its hobbled theme park operations.
Investors overlooked its 53% decline in park revenues in the quarter and welcomed Disney+ streaming services which reached 94.9 million subscribers.
With the news reaching the market, shares of the company rose by 3.1% to $194 and closed at an all-time high in regular trade.
“Mandalorian” series and Pixar’s animated “Soul” movie helped position Disney+ as a credible threat to Netflix Inc’s dominance in the streaming video wars. Including Hulu and ESPN+, Disney’s paid streaming membership topped 146 million.
“Disney+ has been a massive success and is a testament to Disney’s brand equity and expertise in storytelling,” said eMarketer analyst Eric Haggstrom. “This has been one of the most successful consumer product launches in recent memory.”
Disney posted earnings of 32 cents per share for the third quarter.
Although quarterly revenues fell to $16.25 billion from $20.88 billion, a year earlier, above analysts’ average estimate of about $15.93 billion.
During the pandemic “we have made significant changes while finding new and innovative ways to conduct our businesses,” said Bob Chapek, Disney’s Chief Executive on a conference call with analysts. “But at the same time, we have chartered a course for an even more deliberate and aggressive (streaming) push.”
According to Disney’s Chief Financial Officer, Christine McCarthy, the company expects Disneyland in California and Disney Paris to remain closed through March, and hopes its park in Hong Kong can reopen sometime before April.
Disney has delayed a couple of movies since many theatres continue to remain shut due to the coronavirus-induced CONVID-19 pandemic. Disney has moved some films to streaming space, said Chapek while adding that the company still plans on releasing Marvel action movie “Black Widow” in theaters. The film starring Scarlett Johansson is currently scheduled to debut on May 7.
Disney’s media and entertainment distribution unit, which includes streaming, the movie studio and traditional TV networks, reported an operating income of $1.5 billion, marking a 2% decline from a year earlier.
Disney’s parks and consumer products division reported an operating loss $119 million, compared with a profit of $2.52 billion a year earlier.
COVID-19-induced lockdown closures cost the cost around $2.6 billion, according to Disney’s estimate.
For the fiscal year 2021, Disney said, it expects an increase in costs to the tune of $1 billion, to comply with government regulations towards implementing safety measures at parks and at its TV and film production.
Disney’s direct-to-consumer segment, reported an operating loss of $466 million, compared with an operating loss of $1.11 billion a year earlier for the same quarter.