Disney yesterday "reported doomsday financial results" as a "result of the coronavirus pandemic and a television-related write-down, with net quarterly losses totaling $4.72 billion," according to Brooks Barnes of the N.Y. TIMES. But Disney’s newest and "most important business -- streaming -- experienced blockbuster growth as people quarantined at home." Disney in this most-recent quarter "cut executive pay by up to 50 percent and took out a $5 billion line of credit to bolster its liquidity, on top of $8.25 billion secured" earlier this year. Disney Media Networks, a division that includes ESPN, was "helped by the pandemic, at least from a fiscal standpoint." It had "operating profit of about $3.2 billion, a 48 percent increase, because ESPN was able to defer substantial rights payments" to the NBA and MLB. Disney Exec Chair Bob Iger "did not participate" in a conference call with analysts, his "first such absence" since naming Bob Chapek CEO in February (N.Y. TIMES, 8/5). Meanwhile, Disney Senior Exec VP & CFO Christine McCarthy said that last month’s reopening of the Walt Disney World theme park "has so far been disappointing." McCarthy on the conference call said, "The upside we are seeing from reopening is less than we originally expected given the recent surge in Covid-19 cases in Florida" (WALL STREET JOURNAL, 8/5). At presstime, shares of Disney were trading at $129.98, up 10.7% (THE DAILY).
Disney's direct-to-consumer unit, which includes its streaming service, lost $706MGETTY IMAGES
FURTHER ANALYSIS: NBC News' Byers & Garcia-Hodges note ESPN+ had "massive growth with 6.1 million new subscribers due in part to UFC pay-per-view events." Disney's brand power and the launch of Disney+ are "sustaining a company that has seen nearly every aspect of its business ravaged by the pandemic" (BYERS MARKET, 8/5). The WALL STREET JOURNAL's R.T. Watson notes Disney is "getting some help via the limited resumption of professional sports." ESPN recently began broadcasting the return of the NBA and MLB, and thanks to "strong ratings so far, Disney could see an uptick in television advertising revenue in the months to come" (WALL STREET JOURNAL, 8/5). In L.A., Ryan Faughnder notes Disney’s direct-to-consumer and international segment -- composed of Disney+, Hulu and other units -- "continued to lose money." The direct-to-consumer businesses "lost $706 million, compared with $562 million in the prior-year quarter" (L.A. TIMES, 8/5).
RECOVERY ZONE: In DC, Steven Zeitchik writes, "Any hope of a Disney comeback in the last six months of 2020 will turn on several factors related to the pandemic: Whether sports, particularly the NBA and Major League Baseball, can continue uninterrupted and bring much-needed revenue to ESPN" (WASHINGTON POST, 8/5). CNBC’s Scott Wapner noted park revenues were down 85% for Disney, so the “story really is the differences of the businesses." It is the "streaming game versus the rest of the business pain.” With 100 million subscriptions now between Disney+ and ESPN+, that beat "goes on." Wapner: "It’s just how do you manage the future of the traditional side of the business, which is no sports for a long time" (“Squawk Box,” CNBC, 8/5). Disney+ reported 57.5 million subscribers, and ESPN+ reported 8.5 million subscribers. Last November, ESPN+ was at 3.5 million subscribers. Variety reported Disney revenues fell 40% to $11.7B, a number that "missed expectations, even if the adjusted profit was a pleasant surprise for investors." Media networks, including ESPN, saw a 2% drop, to $6.56B. Of note: Disney shares "initially fell on the report but rose more than 4% during the company’s earnings call as CEO Bob Chapek announced an exclusive movie release (Mulan) for Disney+ subscribers" (SBJ Unpacks, 8/4).
