Walt Disney’s profit tumbled 63% in the second quarter as its theme park business took a $1 billion hit to operating income due to coronavirus-related closures.
For the quarter ended March 31, Disney posted earnings of 60 cents per share, down from $1.61 a year earlier and below analysts’ estimates of $89 cents.
Total operating income dropped 37% to $2.4 billion. Disney said the steep drop in theme-park income was primarily due to revenue lost as a result of the closures of all of its parks by mid-March.
“In total, we estimate that the COVID-19 impacts on our current quarter income from continuing operations before income taxes across all of our businesses was as much as $1.4 billion,” Disney said.
As the Los Angeles Times reports, the virus crisis “has taken a major toll on the broader media industry, but Disney in particular has suffered because of its reliance on in-person experiences such as parks, movie theaters, cruise ships and retail stores.”
“Disney has gone from being on top of the world a la Lion King, to feeling like Eeyore stuck in the middle of a perfect storm with no end in sight,” Lightshed Partners analyst Rich Greenfield, a frequent critic of the company, wrote in a blog post.
Parks, experiences and products — normally Disney’s biggest segment in terms of sales — saw revenue fall 10% to $5.54 billion in the quarter.
The direct to consumer segment’s sales surged to $4.12 billion from $1.15 billion a year earlier, with the new Disney+ streaming service surpassing 50 million paid subscribers by early April as more workers stayed at home to slow the spread of the virus.
But the unit lost $812 million due in part to Disney’s heavy spending on building up Disney+.
To weather the crisis, Disney has added billions of dollars to its debt load, slashed executive salaries and furloughed more than 100,000 of its 223,000 employees. The furloughs have hit tens of thousands of parks and cruise workers, as well as employees at the company’s movie studio division.
“The challenges we’re now facing are unprecedented,” Executive Chairman Bob Iger said on an earnings call.
(Photo by DANIEL SLIM/AFP via Getty Images)