DISNEY EARNINGS PLUNGED 91%, WITH A $1.4 BILLION CORONAVIRUS HIT

The Walt Disney Company Board of Directors announced that it will forgo payment of a semi-annual cash dividend for the first half of fiscal 2020 as a result of the operational and financial disruption caused by the Covid-19 pandemic. The company reported lower profits in its fiscal second quarter, seeing a 91% decline. During a company conference call, Executive Chairman, Bob Iger confirmed that the company will evidently bounce back. “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 Disney’s CEO, Bob Chapek. 

This is one of the measures the company has taken in the wake of the pandemic, as well as reducing capital spending, cutting salaries for senior management, and making the difficult decision to furlough employees. During a call on Tuesday, Disney’s Chief Financial Officer, Christine McCarthy explained to analysts that by not issuing a semi-annual dividend, Disney will preserve about USD 1.6 billion in cash, based on the 88 cents a share previously paid to shareholders in January.

Disney’s theme parks, retail stores, cruise lines, and theatrical films were shut down and its advertising business was impacted by the virus. Disney estimates Covid-19’s cost at about USD 1.4 billion in operating income. The company said that the operating income for its streaming unit fell USD 812 million in the second quarter, which reflects a 58% drop. Net income was USD 460 million, or 25 cents a share, in the quarter compared to USD 5.5 billion a year ago, or USD 3.53 a share. Revenues were up 21% to USD 18 billion, which reflects the addition of businesses in the acquisition of 21st Century Fox last year.

Disney’s Direct-to-Consumer and International unit posted a loss of USD 821 million, compared to a USD 385 million loss a year ago. Media networks' operating income rose by 7% to USD 2.4 billion as revenues rose 28% to USD 7.3 billion. The company’s shares were down about 30% for the year to date through Tuesday’s close, underperforming against the broader market’s 11% decline. "As someone who's been around for a while, and led this company through really tough days over the last fifteen years, I have absolute confidence in our ability to get through this challenging period, and recover successfully," Iger said.

Disney said in its quarterly report that its Disney+ streaming service had 33.5 million subscribers as of 28 March.  In April, the company said Disney+ had topped 50 million subs, including 8 million on Star in India. During Disney's earnings call, the number was updated to 54.5 million as of Monday. The company said Disney+ was generating USD 5.63 per subscriber per month. “The international rollout of Disney+ will continue this year, starting with Japan in June," Chapek said. “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.”

ESPN+ had 7.9 million subscribers, up from 2.2 million a year ago and Hulu had 32.1 million subscribers, up 27%. Of Hulu’s subs, 28.8 million were SVOD only and 3.3 million were the vMVPD with live TV channels. ESPN+ was generating USD 4.24, Hulu’s SVOD-only subscribers paid USD 12.06 and its Live TV plus SVOD subs paid USD 67.75. Disney has furloughed about 100,000 employees as it suffers from shutdowns in its parks business, according to McCarthy. Chapek said Disney is seeing signs that customers still want to go on their cruises, though that won’t be for a few more months. Chapek said Disney is seeing signs that customers still want to go on their cruises, though that won’t be for several more months at least.