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Disney reported mixed earnings for its Q3 of 2020 while it continues to feel the impact of the coronavirus pandemic on sectors like its parks business. DIS stock is in the green.
Walt Disney Co (NYSE: DIS) reported on Tuesday a rare quarterly loss in Q3 as the coronavirus outbreak mauled its theme fun parks, television networks and movie studio businesses, even as the crisis helped its streaming services get new clients.
After the Q3 earnings report was released, Disney (DIS) stock rose by 4.28% to $122.31 in after-hours trading while during the main session it was up only 0.81%.
The pandemic made the company to close some of its parks it has all over the globe, postpone the release of its movies, including the long-awaited “Mulan.” while also dabbling its marketing actions on its media networks parts that also includes the sports channel ESPN that was almost robbed since no sport event was happening. The company’s ad revenue in June alone fell 36 percent compared to 2019 due to the lack of sports.
Net loss from continuing operations was $4.72 billion, or $2.61 per share, in the third quarter ended June 27, compared with a net profit of $1.43 billion, or 79 cents per share, a year earlier.
Disney’s parks, experiences and products segment showed the biggest ever seen an impact from the coronavirus outbreak. The unit dangled to an operating loss of $1.96 billion compared to a profit of $1.7 billion in the same quarter last year, after Disney confronted with heavily reduced levels of theme park attendance as most of its global locations closed for much of the quarter. Disney’s cruises were also postponed.
The company stated:
“The most signifiant impact in the current quarter from Covid-19 was an approximately $3.5 billion adverse impact on operating income at our parks, experiences and products segment due to revenue lost as a result of the closures.”
Disney Has Biggest Q3 Loss in Parks, Experiences and Products Segment
The fact is that before the coronavirus outbreak, Disney’s parks, experiences and products segment constituted almost half of 2019’s annual operating profit. That dynamic, however, already began to reveal in the fiscal second quarter, when even the very early impacts of the pandemic and park closures drove a 58% reduction in operating profit in the theme parks segment for the company.
During the fiscal third quarter, Disney reopened both its Shanghai and Hong Kong theme parks, together with some restrictions on attendance. In July, after the end of the third quarter, Disney re-closed its Hong Kong theme park.
The company also reopened its Florida Disney World, Paris Disneyland and Tokyo Disneyland locations in July, with capacity limitations. Disneyland Park in Anaheim, California, remains closed indefinitely, after shutting in mid-March for only the fourth time in company history.
As we already mentioned, the deficiency of movie releases was somewhat balanced by video-on-demand, lower marketing costs and lower movie costs.
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney Plus as we grow our global direct-to-consumer businesses. 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,” said CEO Bob Chapek.