Disney Suffers $4.72B Loss in 3rd Fiscal Quarter as Park Revenue Collapses By 85%

Entertainment and media titan Walt Disney Co. suffered a massive blow during its third fiscal quarter courtesy of the global pandemic. According to the research data analyzed and published by Stock Apps, for the three-month period that ended in June 2020, the Burbank-based giant reported a net loss of $4.72 billion. In contrast, during the same period in 2019, the company posted $1.43 billion as net income.

The total revenue for the period was $11.78 billion, a drop of 42% from the previous year. Notably, analysts’ revenue estimates were significantly higher, which was at $12.39 billion according to FactSet. However, there was a profit of 8 cents per share against an expected loss of 64 cents per share. In comparison to the previous year’s results though, this was a 94% decline year-on-year (YoY).

For the nine months that ended June 30, 2020, Walt Disney Co. reported a total revenue of $50.68 billion. This marked a net income loss of $2.12 billion, contrasted with a profit of $9.65 billion from the previous year’s nine-month period.

$3.5B Operating Income Loss from Disney’s Park Segment

Among the major causes of the decline was the closure of Disney parks. Disneyland, Disneyland Paris and Florida-based Walt Disney World among other parks and resorts were closed in mid-March. This was due to concerns arising from the coronavirus outbreak.

The parks segment was the company’s best performer in Q1 2020. The period, which in Disney’s fiscal year ended in December 2019, saw parks, experiences and products report almost $7.4 billion in revenue.

The figure dropped to $5.54 billion in Q2 2020, and further down to $983 million in Q3. In all, Disney’s parks, experiences and products segment reported a $3.5 billion loss during the third quarter of 2020. This was a drop of 85% for the segment YoY.

Studio entertainment also suffered as movie releases had to be delayed for months. Worse still, movie theatres remained shuttered in the United States. Consequently, the figure went down from $3.76 billion in Q1 to $2.54 billion in Q2 and further down to $1.74 billion in Q3 2020.

Entertainment companies seemed to be among the worst hit during the quarter. Towards the end of July, WarnerMedia parent company AT&T Inc. reported an earnings loss of $830 million for the same period. In its report, it pointed out that HBO Max, a new streaming service, accounted for losses exceeding $400 million for the quarter.

Similarly, Live Nation, a Beverly Hills-based promoter and live event ticket seller reported a drop of 98% in revenue as a result of concert cancellations. During the quarter, it only had 24 concerts, a far cry from the 7,213 concerts reported in Q2 2019. This resulted in a net loss of approximately $568 million.

Fox Corp was among the few entertainment giants that had some good news to report. For the quarter that ended on June 30, 2020, its annual revenue was $12.3 billion. This was an improvement of 8% from the previous year’s $11.4 billion. However, its report covered the entire fiscal year, softening the effects of the pandemic in the first two quarters of 2020.

Sony Corp’s performance was also not as badly affected, largely thanks to its gaming section. The entertainment and electronics firm reported a $2.15 billion profit. This was a decline of only 1.1% YoY, which is remarkable given the circumstances.

The company has in recent times sought to accelerate a shift to recurring revenue streams like gaming content subscription fees. With that in mind, it has made investments in Epic Games, Fortnite creator, and Bilibili, a Chinese video site.

Disney+ Hits 60.5M Subscribers, Surpassing 5-Year Goal

On the bright side though, the quarter found Disney preparing for the launch of Disney Plus, its new streaming service. It was also mulling over the acquisition of 21^st Century Fox Inc., a $71.3 billion transaction.

The third fiscal quarter earnings report included an announcement that the recently launched streaming service had already surpassed 60.5 million subscribers. This brought its total number of paid subscribers to 100 million across its streaming services.

When Disney+ launched, the goal was to reach 60 to 90 million subscribers by 2024. Reaching the goal in 8 months instead of five years was an impressive feat. At the time, Hulu had 35.5 million subscribers for its live TV and on-demand service combined. ESPN+, on the other hand, has more than tripled its 2019 level and stood at 8.5 million.

However, despite the success of the streaming service, the direct-to-consumer segment suffered along with the rest, albeit not as badly. It managed to raise $3.97 billion according to Statista, a drop from the previous quarter’s $4.12 billion.