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Disney (DIS) suffered a loss in the fourth quarter and saw revenue decline from last year as the still ongoing coronavirus pandemic continued to weigh on its theme parks, studios and operations media.
However, results are still better than expected and the company’s fledgling streaming service has seen subscribers jump more than expected. Shares jumped 5.9% after-hours trading.
Here are the key findings from Disney’s fourth quarter tax report, compared to consensus estimates compiled by Bloomberg:
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Q4 turnover: $ 14.71 billion vs. $ 14.20 billion forecast and $ 19.1 billion year-on-year
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Adjusted loss per share T4: 20 cents vs. 73 cents expected vs. year-on-year earnings of $ 1.07 per share
Given the impact of the pandemic on many Disney legacy businesses, investors were prepared to focus closely on growing Disney +, the company’s streaming service for a year. Disney reported that Disney + had attracted 73.7 million subscribers by the end of the fourth quarter, beating estimates of 65.5 million.
“Even with the disruption caused by COVID-19, we have been able to effectively manage our business while taking bold and deliberate steps to position our business for greater long-term growth,” said the CEO of Disney, Bob Chapek, in a press release. “The real bright spot has been our direct-to-consumer activity, which is key to the future of our business, and on this anniversary of the launch of Disney +, we are happy to report that at the end of the fourth quarter. , the service had over 73 million paying subscribers, far exceeding our expectations in its first year alone. “
Hold orders during the pandemic have helped boost engagement on streaming platforms from Disney and other media companies. While lagging behind Netflix’s (NFLX) global subscriber base of nearly 200 million, Disney + ‘s meteoric growth in part led Disney to announce a major revamp in October to help deliver more premium content. directly to consumers via streaming.
The new structure brought the creators of Disney together under one unit to generate studio, general entertainment, and sports content, while leaving another unit to focus on distribution to determine which platform to use to publish the content. whether it’s on Disney + or another of the company’s streaming platforms on TV or in theaters.
The restructuring was announced after the end of Disney’s fiscal fourth quarter, so any tangible results of these changes will appear in the current quarter’s report. However, Disney released its Mulan Live in the September quarter direct to Disney + at $ 30 per month, bypassing the issue of pandemic-induced theater closings and announcing Disney’s latest strategic direction.
However, Disney + remains a losing operation. Disney’s direct-to-consumer and international segment, which hosts the streaming service, posted operating losses of $ 580 million in the quarter, as revenue jumped 41% to nearly $ 4.9 billion. of dollars.
Pain in parks
As Disney + continues to grow, other Disney units have suffered significantly during the pandemic.
Disney’s parks, experiences and products segment has been hit hardest by the pandemic. Disney’s Parks unit reported an operating loss of $ 1.1 billion, as revenue fell 61% from a year ago, amid ongoing closures at parks in Disney theme in California and Paris and low attendance even in places that have reopened. Still, the loss narrowed from the nearly $ 2 billion deficit the business unit posted in Disney’s fiscal third quarter through June.
The recent wave of Disney layoffs has underscored the continuing tension. The company said at the end of September that it planned to eliminate 28,000 workers, mostly at its US resorts in California and Florida, for one of the biggest corporate layoffs announced during the coronavirus pandemic In progress. And according to a recent report from Deadline, more job cuts in the entertainment division of Disney Studios and ESPN are also coming.
The company’s studio entertainment division also suffered again in the quarter, as sales fell by more than half and operating profit fell more than 60%. A pick-up in sports programming and advertising growth during the quarter, however, helped boost Disney’s media networks division, which increased sales by 11% and revenue by 5% from the previous quarter. last year.
“Since March 2020, we have experienced significant disruptions in the production and availability of content, including the transition of major live sports broadcasts from our third quarter to the fourth quarter and fiscal 2021 as well as the suspension of the production of most films and television. content since the end of the second quarter, although some film and television productions resumed in the fourth quarter, ”the company said in a statement.
Across its operations, Disney has said it expects to incur additional costs of around $ 1 billion in the new fiscal year related to COVID-19, as the company rolls out additional security measures for guests and talents. The company also announced that it will not declare a semi-annual cash dividend for the second half of 2020, “in light of the continued impact of COVID-19 and the company’s decision to prioritize investment. in its direct consumer initiatives ”. said.
With most of Disney’s business coming under pressure throughout the pandemic period, Disney stock has underperformed the overall market since the start of the year. Disney shares fell 7% in 2020 through Thursday’s close, compared with a 9% gain in the S&P 500.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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