The Walt Disney Company today reported that it took an approximately $3.5 billion hit on operating income in its theme park segment from Covid-19 in the three months ending June 30.
None of Disney's parks in the United States or Europe were open during the quarter, with Walt Disney World and Disneyland Paris reopening in mid-July. The Disneyland Resort in California remains closed, with no return date in sight.
Shanghai Disney Resort re-opened in May and Hong Kong Disneyland Resort reopened in late June, though Hong Kong closed again in July.
Overall, Disney's Parks, Experiences and Products segment reported $983 million in revenue during the company's third quarter, down 85 percent from the $6.575 billion it recorded in the same period in 2019. The segment also includes the Disney Cruise Line (which also is closed) as well as Disney's merchandise and other non-media consumer product lines.
"Despite the harsh realities we are facing today, we have made some encouraging progress since our last earnings call," Disney CEO Bob Chapek said in a conference call this afternoon. "We've done a responsible phase three opening of our parks in Shanghai, Paris, Tokyo in Orlando, as well as our shopping and dining area, Downtown Disney, in Anaheim. "We have prioritized the health and safety of our cast members and guests and have instituted protocols that include a mandatory mask policy, temperature screenings, increased cleaning and disinfecting, as well as capacity restrictions to promote social distancing. We continue to work with national and local health, and government officials in this very fluid situation and are making adjustments as necessary."
"At Walt Disney World, we are achieving our objective of driving a positive net contribution at current attendance levels, and we expect demand will grow when the Covid situation in Florida improves," CFO Christine McCarthy said. "We are also closely monitoring trends at our reopened sites internationally. In particular, we have been pleased with what we've seen at Shanghai since reopening in May."
McCarthy said later in the call that although WDW was operating on a cash-positive basis, it was not generating as much income as the company had expected after its return, due to the surge in Covid cases in Florida.
Chapek noted "some level of trepidation to travelers who are anxious about long distance travel jumping on a plane and flying to Walt Disney World." He acknowledged that Disney World has seen "a higher than expected level of cancellations" during the current outbreak, but that Disney was maintaining its planned attendance levels.
"What we've done is used our strategy for yielding and made sure that every day we're pretty close to the percentage of the park that we can fill and still maintain the social distancing," Chapek said. "We just replace local and annual passholders with some of the fall-off we've necessarily seen from the long distance travelers. I will say that our research indicates that, and our bookings indicate, that we should be in good shape once consumer confidence returns."
Chapek said that 50 percent of Walt Disney World's current visitors were coming from outside the Florida market, however.
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The pandemic has been a tough hit on everyone. Fortunately WDW, has two e-tickets, a d-ticket, two huge entertainment events and a groundbreaking new resort that will open in the next two years.
^But after that, I wouldn’t get your hopes up on new attractions for a loooong while.
Yep, Disney is doing just fine. That's why they're asking you to buy Mulan on Disney+ for $30. Lmao
Disney reported $3 billion loss in parks and $4.72 billion loss overall for the quarter. Yikes.
Oh brother the "Apple on verge of buying Disney" stuff again?
@Trex: I don't think they will need to add much more beyond what's already under construction. Play Pavilion, maybe and perhaps some new entertainment celebrating the Walt Disney Company's 100th anniversary in 2023. But Galaxy's Edge still has the new car smell, Pre-pandemic 'Flight of Passage' still had ten lining up.
Also there is the EPCOT space restaurant and (hopefully) the new Cirque show at DSTP.
WDW certainly looks strong coming out of this mess.
It's nice that Disney has some attractions being built, but who exactly is going to be visiting? Florida residents? The current pandemic isn't going to magically disappear and the financial impact is going to continue long after a vaccine is produced (who knows how effective it will be). We're in the midst of a massive reboot that will change how travel and leisure activities will be considered going forward. International travelers won't be visiting Florida anytime soon and depending how well we end up handling the pandemic, it may be years before they even remotely consider coming back much less if their home countries decide it is safe for travel to the US.
Disney could easily see another 9/11 type scenario where attractions were built prior to 2001, but then there was a long lag before they invested in the parks again. The last time this happened was after Universal built the first part of Potter in IOA.
So yeah, it's nice to have things in the hopper, but you have to have willing visitors to travel in order to profit from them.
M&A's should only take place only when it makes both companies better, and I don't see how Apple buying Disney would make either company better. Apple is a tech and consumer products company, Disney is an entertainment company, and I don't think Apple has any interest in becoming a holding company. Also even though they had a really, really bad quarter its not like Disney is selling at a discount right now. They were closed and had to give out tons of money in refunds but now they are open again and the CFO said Disney World is profitable and their valuation and stock price haven't even gone down.
Would that be the reason they don't maintain their rides like Splash Mountain.
Regarding what I said about about Disney not being at a discount, Disney would be even more expensive now. The stock is having the best day in years.
@the_man: Folks have been spreading this "Disney is going bankrupt" thing for a while despite evidence. Every time a movie does badly, it's "Disney has to sell of Marvel and/or Lucasfilm to pay debts" ignoring how there are none. Yes, this is a major loss but then again, Apple is likewise suffering some tough business too, everyone is. Some folks just love to think of Disney being bought out "as karma" when you point out it would just cost Apple far more to buy them than they'd make off said purchase.
Let's not kid ourselves that Apple is just a tech company and Disney is just an entertainment company. Both companies are blurring the lines between these two industries, and are head-on competing in the streaming market (Apple TV versus Disney+). There's a lot more crossover between these two brands than many people realize, but I doubt in the current market we would see any scenario where they would merge. It's always a possibility, and certainly plausible in the long term based on corporate history, but it's not something that's going to happen near term.
MikeW wrote: "Yes, this is a major loss but then again, Apple is likewise suffering some tough business too, everyone is."
Apple just posted a $60 billion dollar 3rd quarter. Up 11% from last year. Suffering indeed.
Is it possible? Sure, maybe but Apple has to know taking on Disney can also be taking on a lot of debt and scores of issues which can hamper its own bottom line. Plus, not much sense to buy, say, Disney+ when Apple is trying to get its own service going. Sure, adding Lucasfilm/Marvel is appealing yet history shows that buying a business in "trouble" is a move that can backfire and even the most logical mergers can fail (see AOL-Time Warner).
I think Disney+ is the exact reason that Apple would be interested. Disney+ is at 100 million subscribers now (with ESPN and Hulu included) and quickly gaining ground on Netflix in the streaming wars. Add Apples cash flow and muscle and a Disney/Apple alliance could put Netflix in the rear view. The_man also makes a good point about Disney not being at a discount, their stock is soaring. Not saying it will happen but the streaming wars is what would interest Apple most IMO.
Again, I can see it but right now, it's not like Disney is dirt cheap and the costs of the buy not quite the bargain Apple would want.
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Seems like a perfect time for the newly minted most valuable company in the world to make an offer.....a merger/acquisition that has been talked about for many years now.