This post was originally published on this site
Walt Disney Co. reported a quarterly loss of nearly $5 billion Tuesday due to a pandemic that has all but paralyzed its theme parks, live productions and cruise line.
Disney DIS, +0.80% reported a fiscal third-quarter loss of $4.72 billion, or $2.61 a share, compared with net income of 79 cents a share in the year-ago quarter. The loss was largely due to a $4.95 billion charge Disney took as a result of the pandemic and changing media habits globally. The company said the impairment charge “reflected the impacts of COVID-19 and of the ongoing shift of film and television distribution from licensing of linear channels to a direct-to-consumer business model on the International Channel businesses.”
After adjusting for that charge and other factors, Disney reported net income of 8 cents a share, compared with $1.34 a share a year ago. Revenue plunged 42% to $11.78 billion from a record $20.25 billion a year ago. Analysts surveyed by FactSet had expected an adjusted loss of 64 cents a share on sales of $12.4 billion.
Read more: Disney+ was the only plus for Disney as coronavirus slammed other businesses
Disney shares initially dropped 2% in after-hours trading, but then moved closer to the closing price of $117.29 and hovered around that price ahead of a conference call scheduled for later in the afternoon. Disney’s shares are down 19% this year. The broader S&P 500 index SPX, +0.36% is up 2% in 2020.
Sales in the theme-parks business plummeted to $983 million from $6.58 billion a year ago; analysts had been expecting $1.05 billion on average. Disney’s TV business reported revenue of $6.56 billion, down from $6.71 billion a year ago but higher than the average analyst estimate of $6.28 billion. The movie business declined to $1.74 billion from $3.84 billion a year ago, while analysts expected $1.67 billion.
Disney’s earnings were helped by an accounting maneuver in the TV business that boosted operating income beyond expectations. Disney said that it moved costs related to its ownership of rights to sports programming to future quarters because U.S. professional sports were not played in the quarter. That boosted operating income in the media-networks segment to more than $3 billion, 48% higher than last year and nearly double analysts’ average expectation.
A lone bright spot was Disney+, which launched in mid-November and now boasts 57.5 million subscribers. The direct-to-consumer and international division, which includes Disney+, was the only Disney segment to grow from last year, reporting revenue of $3.97 billion after recording sales of $3.86 billion a year ago. Analysts had expected $4.65 billion, according to FactSet.
“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,” Disney Chief Executive Bob Chapek said in a statement announcing the results.
The success of Disney+ — aided in great part by original content, led by the wildly popular “Hamilton” movie released in July — comes amid fierce competition with Netflix Inc. NFLX, +2.21% , Apple Inc. AAPL, +0.66% , Amazon.com Inc. AMZN, +0.86% , and new streaming entrants from AT&T Inc. T, +1.31% and Comcast Corp. CMCSA, +0.77% .
More help could be on the way from Disney’s ESPN and ABC, which missed out on the NBA Finals during the quarter, but began airing fresh NBA action last week. Major League Baseball’s restart on July 23 set TV ratings records on ESPN, though the sport has been clouded by a COVID-19 outbreak among the Miami Marlins and St. Louis Cardinals, leading to a string of postponed games.
Disney also recognized a gain of nearly $400 million from its investment in DraftKings Inc. DKNG, +0.33% , which went public in late April. Disney had invested in the daily-fantasy and sports-gambling website when it was a startup, and said that its investment had appreciated by $382 million, which landed on Disney’s bottom line.
