Pandemic Pummels Disney in Fiscal Q2

Media nets show gains, but not enough to stem hemorrhaging at theme park, studio segments
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The Walt Disney Co. released fiscal second quarter results Tuesday that were severely impacted by shutdowns due to the COVID-19 pandemic, as gains at its cable and broadcast channels weren’t enough to bolster steep declines at its theme parks and studios businesses.

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Disney’s overall revenue was up 21% to $18 billion during the period, but operating income fell 37% to $2.4 billion in the period, while net income cratered 91% to $475 million in the period.

The main culprits for the declines were its Theme Parks division (where revenue was down 10% and operating income fell 58%), which have been shuttered since early March because of the pandemic and its studio division (where revenue increased 18% but OI was down 8%), which has been impacted by closed theaters and a suspension of new show production.

Media Networks revenue was up 28% to $7.3 billion, and operating income grew 7% to $2.4 billion. Breaking down the segment, cable network revenue rose 17% to $4.4 billion while broadcast revenue was up 28% to $2.8 billion. Operating income at the cable networks was basically flat (up 1%) to $1.8 billion, while broadcast OI increased 53% to $397 million.

Decreases at its sports network ESPN were due to higher programming and production costs and lower advertising revenue, partially offset by higher affiliate revenue.

“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,” Disney CEO Bob Chapek said in a press release. “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.”

The streaming businesses seemed to benefit from the pandemic. Disney+ ended the quarter with 33.5 million customers. ESPN+ saw customers nearly quadruple from 2.2 million in the prior year to 7.9 million in the most recent quarter. Hulu saw its total subscribers rise 27% to 32.1 million, with 28.8 million SVOD only (up 24%) and 3.3 million Hulu Live TV + SVOD customers, up 65%. 

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