Walt Disney Company Third Quarter Earnings show the theme parks revenues decreased 85 percent and a loss of $3.5 billion in revenue

Aug 04, 2020 in "The Walt Disney Company"

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Posted: Tuesday August 4, 2020 4:00pm ET by WDWMAGIC Staff

The third quarter earnings report from the Walt Disney Company shows the magnitude of the COVID-19 shutdown to all aspects of the business.

Walt Disney World began its phased reopening on July 11 2020

Specifically in the Parks, Experiences and Products division, losses were reported at $3.5 billion in revenue, a decrease of 85%. This resulted in an operating loss of $2 billion.

On the subsequent earnings call, Christine McCarthy Chief Financial Officer said that Walt Disney World is generating a "positive net contribution" at current attendance levels, with demand expected to grow. However, upside at Walt Disney World is less than originally expected, attributed to the recent surge in COVID-19 in Florida. According to McCarthy, spending is very strong per capita, likely resulting from a pent up demand for Disney.

Bob Chapek said that there was ample demand prior to the surge in Florida cases, which subsequently dropped off as guests became wary of traveling to Florida. 50% of guests are still traveling from a distance, with the remainder coming from within Florida. Attendance from long distance visitors has been replaced by local and annual passholders where possible, but it was noted that locals do not carry the same spending value as those who travel further and stay for longer. A higher level of cancellations has also been seen since the rise in cases which was not apparent when the parks were announced to be reopening.

Elsewhere at the company, Media Networks was down 2%, Studio entertainment was down 55%, and Direct-to-Consumer and International (which includes Disney+ and its more than 60 million global subscribers) was up 2%.

“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “The global reach of our full portfolio of direct-to-consumer services now exceeds an astounding 100 million paid subscriptions -- a significant milestone and a reaffirmation of our DTC strategy, which we view as key to the future growth of our company.”

Disney's theme parks were closed for nearly 4 months and have reopened with capacity restrictions

You can view the full earnings report here, and below is the Parks, Experiences and Products statement.

Parks, Experiences and Products

Parks, Experiences and Products revenues for the quarter decreased 85% to $1.0 billion, and segment operating results decreased $3.7 billion to a loss of $2.0 billion. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses and to a lesser extent, at our merchandise licensing and retail businesses.
As a result of COVID-19, our domestic parks and resorts, cruise line business and Disneyland Paris were closed for all of the current quarter. Our Asia parks and resorts were closed for a portion of the current quarter, as Shanghai Disney Resort re-opened in May and Hong Kong Disneyland Resort re- opened in late June (Hong Kong Disneyland Resort closed again in July).
The decrease at licensing and retail also reflected the impact of COVID-19, which resulted in decreases in licensing earned revenue and lower minimum guarantee shortfall recognition, the closure of our Disney Stores for most of the quarter and the write-down of store assets.
We estimate the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $3.5 billion.

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brianstlAug 11, 2020

60% of the time it works...every time.

GoofGoofAug 11, 2020

In the recent poll that was posted people felt most comfortable with Disney vs other theme parks for what that’s worth. People aren’t traveling and aren‘t real interested in public places with crowds. That’s a Covid thing, not a Disney one.

Disstevefan1Aug 11, 2020

Its not that Dear Mickey isn’t popular, it’s the Dastardly COVID that isn’t popular. Disney was making money hand over fist before COVID, everyone knows this.

Jrb1979Aug 10, 2020

This post right here is what I am talking about in regards to Disney fans not wanting to hear Dear Mickey isn't popular right now.

peter11435Aug 10, 2020

People are debating the why but I don’t think anyone is disputing that parks aren’t doing well.

Jrb1979Aug 10, 2020

There is many on here who say demand and travel is not as bad as being reported. They also say those polls are fake news.

MisterPenguinAug 10, 2020

Who's saying that demand isn't low?

GoofGoofAug 10, 2020

At least for WDW which is open right now Disney’s own internal numbers seem to support the poll results. You don‘t moth ball whole resorts and cut back on already dramatically reduced theme park hours if you think demand is coming back any time soon.

Disstevefan1Aug 10, 2020

Polls can be written is such a way to get the desired result. In any event, Disney will do whatever it feels is best for the shareholders, be that opening Disneyland or not. In the case of Disneyland they also must get the OK from the governor if they wish to reopen.

Jrb1979Aug 10, 2020

All I picture from the few in here in regards to demand is they have their fingers in their ears and going lalalala. They don't want to hear that Disney and all theme parks are not doing very well right now.

rowrbazzleAug 10, 2020

Source? 😉

Basil of Baker StreetAug 10, 2020

All irrelevant because 72.6% of all statistics are made up.

GoofGoofAug 10, 2020

It was 2,220 people they polled and I don’t see where it says that they were from the same household: The survey found that parents are hesitant to return to theme parks even with new health and safety measures in place. The survey polled 2,200 Americans between July 23-26 about how safe they feel returning to Disneyland and other U.S. theme parks amid the COVID-19 pandemic. https://www.ocregister.com/2020/08/08/parents-not-ready-to-take-their-kids-to-disneyland-poll-finds/?utm_content=tw-ocdisney&utm_campaign=socialflow&utm_source=twitter.com&utm_medium=social How many people do they need to poll before it becomes statistically relevant for you? 10,000 or 100,000 maybe a million? You do know that’s not how polling works right? 2,200 is more than enough to have a valid sample assuming the sample was random. I‘m not sure what your point is on the Bobs other than to argue just to argue. The entire board of directors was on the call and every member of the senior management team too. Only a handful of people have speaking roles. It’s not that complicated. It’s how every public corporation works.

legwand77Aug 10, 2020

They only asked 962 parents. So perhaps only 500-700 households. Just clarifying that both Bob's were not "on the call". Like I said of course demand is down, but not as bad as what one small poll states.