Disney Earnings Plunge 93% Amid Shuttered Theme Parks And Movie Theaters

A screenshot from the documentary series "The Imagineering Story." Disney's earnings have plummeted since the coronavirus pandemic took hold. (Courtesy Disney)

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The Walt Disney Co. doesn't traffic in horror movies, preferring family-friendly entertainment instead. But the entertainment giant still produced a terrifying tale on Tuesday, when Disney released its pandemic-plagued earnings.

Few media companies were worse-positioned for the global coronavirus outbreak than Disney, as almost all of its core businesses depend on large crowds gathered in close proximity.

Its 14 theme parks (responsible for half of Disney's profits) are closed, its cruise ships and Broadway musicals are locked down, and Disney's film unit — which not long ago claimed 40% of all tickets sold — can neither produce nor release a new movie. Disney's toy stores are padlocked, and former ratings juggernaut ESPN has no sports or highlights to show.


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In its report to Wall Street and investors, Disney said the pandemic cost it as much as $1.4 billion in the first three months of the year, with $1 billion of the losses coming from its theme parks division. Overall earnings plunged 93% compared to the first quarter a year ago.

"The challenges we are now facing are unprecedented," Bob Iger, Disney's executive chairman, said in a conference call announcing the earnings. Iger, who was succeeded by Bob Chapek as CEO earlier this year, said that Disney was nevertheless well-situated to return strongly, whenever that might be. "People want good news. They want to experience joy and the feeling of togetherness."

Disney said it will open its Shanghai theme park on May 11, but guests will be required to wear masks and have their temperatures checked.

HORROR AT DISNEY, THE SEQUEL

As grim as they were, Disney's earnings don't capture the full impact of the pandemic, as they include results from January and February, well before much of the globe was shut down. What's more, Disney is spending billions on things like new cruise ships — three are under construction — but booking passengers for them won't be easy. Another alarming note for investors: Disney said it was suspending its July dividend, to save $1.6 billion in cash.

So far this year, Disney's stock price has collapsed about 30%, more than twice as badly as the overall market. Netflix, one of Hollywood's biggest beneficiaries of shelter-in-place orders, has seen its stock price surge by 30% in the year.

THE RUSH TO STREAM

While it won't generate meaningful profits anytime soon because its startup costs totaled hundreds of millions of dollars, the company's new streaming service, Disney+, is off to a strong start.

With families sheltering in place, streaming entertainment has surged, and Disney signed up 33.5 million paid subscribers for its new Disney+ through the end of March. Disney-owned Hulu claims more than 30 million subscribers, and ESPN and Netflix's Michael Jordan basketball documentary series, "The Last Dance," has been hugely popular.

Viewership at Disney-owned ABC has also been comparatively strong, but advertising income across all forms of media — including at ESPN — is plummeting.

Before it announced its financial results, Disney had been laying off tens of thousands of employees, mostly at its theme parks.

The company said for the time being it would pay health benefits for those who have lost their jobs, but it's impossible to predict how long that coverage will last or when all of the theme parks will return to anything even approximating capacity.