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Disney earnings plummeted in its third quarter. Blame COVID-19

Ryan Faughnder, Los Angeles Times on

Published in Business News

Walt Disney Co. suffered a major decline in earnings in its third fiscal quarter, illustrating the severe damage dealt to the world's most powerful entertainment company by the COVID-19 pandemic, which has kept Disneyland closed, cratered global tourism and delayed movie releases for months.

The Burbank, Calif., entertainment giant posted a net loss of $4.72 billion for the three months that ended in June, Disney said Tuesday. That's compared with the $1.43 billion in net income the company reported for the same period in 2019.

However, the media and entertainment titan did better in terms of profit than analysts expected, thanks in part to growth in its TV and streaming businesses. Excluding certain items, Disney posted a profit of 8 cents a share, down 94% from the same period of time a year ago. Analysts polled by FactSet on average had expected a loss of 64 cents a share.

Total revenue for Disney was $11.78 billion, down 42% from a year earlier. Analysts had estimated $12.39 billion in revenue.

Disney stock rose 4% in after-hours trading on Wall Street after the earnings release.

The driving force behind the earnings decline, of course, was the coronavirus. Disney estimated that its parks, experiences and products segment alone suffered a $3.5-billion hit to operating income because of the effects of the pandemic during the quarter.

 

Disney closed its domestic parks and Disneyland Paris in mid-March amid growing public health concerns surrounding the coronavirus. The crisis has taken a deep toll on the entertainment and hospitality industries overall, but Disney was particularly vulnerable. Its mighty movie studio primarily makes films designed to be seen in theaters, which remain largely shuttered in the U.S. And Disney's biggest business -- parks and resorts -- have suffered from months of closures.

Disneyland remains closed indefinitely as the pandemic continues to grip California. Walt Disney World in Florida -- where, despite surges in cases, the government has loosened restrictions on the economy faster than in many other states -- reopened last month with limited capacity and strict protocols to limit the risk of spreading the coronavirus.

Shanghai Disneyland was the first Disney resort to reopen, welcoming back guests starting May 11 with pandemic-driven restrictions and rules, including masks for employees and patrons. The company's parks in Paris and Tokyo have also begun phased reopenings. Hong Kong Disneyland reopened in June, but shut down again last month because of a rise in coronavirus cases.

Revenue for parks, experiences and products, normally a powerhouse for the company, collapsed 85% to $983 million in the quarter. The division's operating loss was $1.96 billion, compared with a profit of $1.72 billion during the prior-year third quarter.

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