Disney's
However, the pandemic has led to accelerating growth for Disney+ which has achieved multiples years of growth in a quarter.
Inside the Numbers
Overall, Disney reported an adjusted 8 cents loss for its earnings per share versus an expected loss of 64 cents per share. Revenue came in below expectations at $11.78 billion vs $12.37 billion expected.
Parks revenue was $983 billion, which was down 85%, compared to the same quarter in 2019. Media networks revenue was down 2% as ad spending fell off.
In the short-term, ad spending could be supported by political ads, but it's in a secular downtrend as traditional media becomes less influential. Studio entertainment also took a big hit with movie theatres being shut down, showing a 55% decline.
Streaming Success
While the parks division suffers from little clarity on when things will return to normal, Disney's streaming offerings are a huge success. It was the only part of the company to show revenue growth on an annual or quarterly basis.
In total, Disney has 100 million subscribers, across all its packages which include ESPN+, Disney+, and Hulu. Disney+ already has 60 million subscribers. The company's original goal was to reach 60 million to 90 million subscribers by 2024.
Disney also announced another streaming offering which would be composed of content from ABC Studios, Fox Television, 21st Century Fox, FX, and Searchlight and distributed under the Star brand. It's planned to be made available as a standalone product and through the Disney+ app.
It's interesting to note that Disney's market cap is $10 billion more than Netflix's
Stock Price Impact
After the company's conference call, shares were higher as negative news was priced into the stock. However, the company exceeded expectations for subscriber growth. Additionally, the company announced that "Mulan" would be available to subscribers for $23.99 which should drive even more growth for its streaming service.
The movie had been originally planned for a September release and was expected to be the company's next blockbuster film.
It's Disney's first attempt to further monetize the platform and represents a different approach than other streaming services. However, it's an arguably cheaper and more convenient way for a family to watch a movie.
The company has cut dividend payments for the time being due to the uncertainty, and there is little clarity on when it will be reinstated. With parks shutdown, the company has had to lay off so staff and has decided against the optics of paying shareholders while it reduces headcount.
In terms of parks being reopened, the California park opening had to be delayed due to the spiking case count in the state. Disneyworld is open in Florida but even there, the number of visitors is depressed due to the outbreak in that state. There are restrictions on visitors, social distancing rules are in place, and many attractions have been temporarily canceled. Additionally, international travel to the U.S. has also taken a severe dip.
