Walt Disney Company Fourth Quarter Earnings show 'Parks, Experiences and Products' down 61 percent year over year

Nov 12, 2020 in "The Walt Disney Company"

Posted: Thursday November 12, 2020 4:00pm ET by WDWMAGIC Staff

The fourth quarter earnings report from the Walt Disney Company continue to show the effects of the COVID-19 shutdown and subsequent reduced capacity at its theme parks.

Revenues for the quarter were $14.71 billion, with a loss per share of 20 cents. Disney has estimated that the impact of COVID-19 for the fourth quarter has been $3.1 billion. $2.4 billion of that was in the 'Parks, Experiences and Products' segment. Parks, Experiences and Products revenue was $2.58 billion, down 61% year over year.  The parks experienced an operating loss of $1.1 billion due to Disneyland and Disney Cruise Line closure. Walt Disney World achieved a net positive contribution during Q4, and has seen reservations 77% booked for Q1 and Thanksgiving week booked at close to available capacity.

Disney also stated in the earnings call that they expect Disneyland Resort to remain closed through the end of fiscal year Q1, which means the remainder of 2020.

“Even with the disruption caused by COVID-19, we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth,” said Bob Chapek, Chief Executive Officer, The Walt Disney Company. “The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we’re pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers – far surpassing our expectations in just its first year.”

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 61% to $2.6 billion, and segment operating results decreased $2.5 billion to a loss of $1.1 billion. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses.

As a result of COVID-19, Disneyland Resort and our cruise line business were closed for all of the current quarter. Shanghai Disney Resort re-opened in May, while Walt Disney World Resort and Disneyland Paris re-opened in mid-July and Hong Kong Disneyland Resort was open for about two weeks at the beginning of the quarter and about one week at the end of the quarter. All of our re-opened parks and resorts operated at significantly reduced capacities during the current quarter.

We estimate the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $2.4 billion.

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ParentsOf4Nov 13, 2020

I'm thinking the same thing. Crowds were noticeable heavier when we went in late September (after Halloween season had started) compared to what they were like when my son went in mid July. He sent me lots of photos with light crowds throughout all 4 parks. Crowds were definitely heavier when I went in late September. Here's a link to my September 2020 trip report, with lots of photos to show what the crowds were like: https://forums.wdwmagic.com/threads/the-%E2%80%9Cis-it-safe-%E2%80%9D-trip-report.970517/ In November, I went to (mostly) the same parks on the same days and did not notice much of a crowd difference from September. It's not scientific but, for comparison, the following photos were all taken on various Sundays at approximately the same time in the evening. September 2019: July 2020: September 2020: November 2020:

ServerfarmNov 13, 2020

Surprise, no wall street types asked about the thousands of Cast Members laid off. A lot of folks are ending their term at Disney over the next 2 months, we're in Q1 (the call was for Q4). Though a good # of Fox/Hulu/DTCI/ESPN/MN folks were let go in Sept. Next round is Feb if the finance/legal guys are in "business as normal" mode. fyi, synergy = layoffs innovation = cutting capex (and reorgs)

Giss NericNov 13, 2020

If you watch a lot of Disney Youtubers who goes on a weekly basis you can tell when it took effect. I think when Halloween season started.

JoeCamelNov 13, 2020

Oh Len, you gotta get a new bus driver... Just kidding I know how hard you work to bring us a complete picture of what is happening in the parks. Thanks See above for the source

SirwalterraleighNov 13, 2020

Who did you ask? I’ll always remind that no one in Orlando has ANY power. Never will.

SirwalterraleighNov 13, 2020

This is actually “literally” what it means: https://www.dictionary.com/browse/synergy

lentestaNov 13, 2020

Either this change happened very recently or Chapek said something that wasn't yet implemented. I've asked two specific people this exact question in the past week, and they both said the parks were at 25%. Also, 35% of EPCOT park capacity is slightly above an average day of pre-pandemic attendance.

GoofGoofNov 12, 2020

Synergy with a merger always means cutting headcount. It’s not a secret buzzword, that’s literally what it means. If I buy a company and I combine it with my operation the synergies come from the duplicate functions I no longer need. At an over simplified level I have 2 CEOs and only need 1 so when I cut the 2nd CEO the cost saving goes down as synergies. Almost every merger of public companies relies on synergies to make it work financially. They aren’t all headcount related, in some cases you can combine corporate headquarters or cut IT maintenance agreements, stuff like that. They will usually quote an amount expected to be saved from synergies but with a large merger it may take years to fully achieve them. I don’t know what the cost synergies related to the Fox deal were or how long they are expected to take to achieve but it wouldn’t surprise me at all if they are still seeing cost reductions from it.

SirwalterraleighNov 12, 2020

They used “synergy” internally at least 21 years ago (give or take 😉)...it felt “dirty” then...nothing has changed

LilofanNov 12, 2020

Iger also used the term " synergy" when Disney and Fox did a merger. Not many knew what that meant until layoffs started happening before and during the merger.

SirwalterraleighNov 12, 2020

Yep... Just like “globalization” has been code for “sweatshop slave labor” for 40 years

ParentsOf4Nov 12, 2020

"Synergy is the new term for layoffs" Sadly, no, it's been a layoff buzzword for some time.

TrainsOfDisneyNov 12, 2020

One did. And several asked some tough questions regarding other decisions.

DVCakaCarlFNov 12, 2020

Remember the photo pass robots?