Disney Reports First Quarterly Earnings Since Pandemic Began
In its quarterly earnings call with investors on Tuesday afternoon, home-bound Disney executives offered sobering assessments of the impact of the coronavirus outbreak on the multinational entertainment company's businesses. With closures of its theme parks, resorts and cruise ships, a shuttered movie business and declining television ad revenue, the company estimates losses to be, "as much as $1.4 billion" in the second quarter of 2020.
Chairman of the Board Bob Iger, who delayed a planned retirement to help guide the company through the crisis, began the call sounding beleaguered. "Like so many other industries, the pandemic has hit us hard." Iger's replacement, Bob Chapek, said that when he started the new job of CEO just two and a half months ago, "None of us could've imagined the suffering and sacrifice that we're now seeing around the world."
The big news was the announcement that Shanghai Disney will open on May 11. Chapek, a 30 year veteran of the company, called it a "phased approach," explaining they would limit attendance and everyone, employees and guests, would wear masks.
As the nation's largest media conglomerate, Disney's brands include Pixar, Marvel, Star Wars, as well as 21st Century Fox, ABC and ESPN. Disney also controls Hulu and launched its new streaming service, Disney+, last November.
UBS analyst John Hodulik says, even accounting for the lack of live sports during the pandemic, Disney added far fewer subscribers to Hulu Live than he was expecting. As the economy slows and people continue to lose their jobs, "we've got a very tough quarter coming."
During the call, Disney CFO Christine McCarthy announced the board's decision to forgo paying a cash dividend for the first half of fiscal 2020, saving the company about $1.6 billion in cash.
"It makes sense," analyst Hodulik says. Since Disney furloughed more than 100,000 employees, "there's no reason why the shareholders shouldn't have to share in some of the pain."
Disney's next big movie release, Mulan, is scheduled to open July 24. Chapek said their "fingers are crossed" that, by then, there will be "incredible pent-up demand."
Bob Iger, the former CEO, who had seen the company through economic downturns and natural disasters believes the need for Disney's "messages of hope and optimism" is greater than ever and will sustain the company through this unprecedented time. "People want good news. They want to feel joy and the feeling of togetherness." In other words, a magical kingdom.
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