Profit Drops at Disney Amid COVID-19 Pandemic

While reporting strong subscriber gains for its SVOD platform, The Walt Disney Company saw its profit plunge in the second quarter as it deals with the impact of the novel coronavirus pandemic.

“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said CEO Bob Chapek. “Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”

Disney had to shutter all of its parks, retail stores and experiences once the COVID-19 pandemic hit. In addition, there have been shortened or canceled theatrical releases and suspended stage play performances at the studio entertainment segment and ad revenue reductions in its media networks and direct-to-consumer & international segments. Across its businesses, Disney estimates that income from continuing operations took a $1.4 billion hit as a result of the COVID-19 pandemic.

Media networks revenues rose 28 percent to $7.26 billion while operating income was up 7 percent to $2.37 billion. The cable networks posted revenues that were 17 percent higher, at $4.4 billion, with operating income rising 1 percent to $1.8 billion, largely as a result of the consolidation of the Fox businesses (primarily FX and National Geographic), partially offset by a decrease at ESPN, where viewing and ad revenue is down due to the cancelation of sports events. There were also lower ad revenues at the U.S. Disney Channel and Freeform. Broadcasting revenues were up 49 percent to $2.8 billion. Broadcasting operating income was up 53 percent to $397 million.

Studio entertainment revenues were up 18 percent to $2.5 billion. Operating income fell 8 percent to $466 million.

Revenues at direct-to-consumer & international more than doubled to $4.1 billion but the segment’s loss widened to $812 million. The company reported in its investors call that its subscriber number had climbed to 54.5 million.

Revenues at the parks, experiences and products division fell 10 percent to $5.5 billion and operating income dropped 58 percent to $639 million.