Pandemic shutdowns substantially dented parks revenues and led to a ‘significant’ decline in ad sales. Disney saw a $1.4 billion income hit in the most recent quarter due to Covid-19 and said its streaming services are a lone bright spot.
Key insight:Disney expects ESPN to take a much bigger ad revenue hit than other its networks while live sports are paused.
Media and entertainment companies of almost all stripes are facing unprecedented challenges due to the novel coronavirus pandemic and its related economic headwinds. For Disney, the fallout from Covid-19 resulted in a $1.4 billion income hit in its most recent fiscal quarter.
In its quarterly report today, Disney said shutdowns due to the ongoing pandemic had a $1.4 billion income impact in Q1, $1 billion of it due to closures in Disney’s global parks, cruise and consumer products segment. Revenues for the quarter in that segment decreased 10% to $5.5 billion, and that segment’s operating income decreased 58% to $639 million. The company’s extensive theme parks, cruise line and retail businesses count as its biggest revenue driver, comprising nearly 38% of Disney’s revenue in 2019, or more than $26 billion, according to company filings.
That exposure, plus hits to other segments to the business including theatrical releases and advertising revenue on its broadcast networks, has made Disney+ even more crucial to Disney’s portfolio. On a call with investors Tuesday, Disney CEO Bob Chapek, who assumed the position in February, offered up a more positive figure for investors to hone in on. Disney+ had 33.5 million paid subscribers at the end of the quarter, with customers paying an average of $5.
