Disney Estimates $1.4 Billion COVID-19 Impact for Quarter as Earnings Fall

Earnings at the high-flying Walt Disney Company fell sharply during its most recent quarter, brought low by the gravitational force of the coronavirus pandemic.

Earnings topped out at 60 cents a share, a 63% tumble from the prior-year period. It was a drop that was expected as few companies have been harder hit by the public health crisis that’s ground travel to a halt and shuttered movie theaters, postponed live events, and upended consumer behaviors. That’s been devastating for Disney’s highly profitable theme parks. The company estimated that COVID-19’s impact had resulted in approximately $1 billion lost in its parks, experiences, and consumer products business, and $1.4 billion in losses across all of its operations.

Revenues at the company did climb 21% to $18.01 billion, but that has largely to do with difficult year-over-year comparisons. Disney was a much smaller company when it last tabulated its first quarter earnings — its $71 billion acquisition of much of 21st Century Fox didn’t close until late March.

The financial picture was somewhat brighter than the investment community’s more dire predictions. Wall Street projected that the company would report adjusted earnings per share of 86 cents, which Disney missed, but its revenues were more robust than the $17.68 billion that most analysts had estimated the company would log.

Because of the global nature of its business, Disney began feeling the impact of the virus earlier and more intensely than other media companies. In January, it was forced to close its parks Shanghai and Hong Kong. A month later, its outpost in Japan shuttered and in March its resorts in the U.S. and Europe were closed. Disney also has a cruise business, which has been dry-docked until the crisis is alleviated. With travel restrictions in place across the world, it’s unclear when those businesses will swing back into profitability.

One bright spot for the company has been Disney+, the streaming service it launched in November. The subscription offering has added customers who are looking for diversions during the pandemic.

The pandemic hit as Disney was undergoing a leadership change. Bob Iger, the long-time Disney chief who oversaw the company’s acquisitions of Marvel, Pixar, and LucasFilm, is stepping down and will be replaced by Bob Chapek, the former head of its parks, experiences, and consumer products division.

“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,” Chapek said in a statement. “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.”

More to come…