Disney’s fourth quarter crushes Wall Street estimates, stock pops after hours; Nearly $ 14 billion in revenue, parks suffer $ 2.4 billion COVID hit – Deadline

Walt Disney topped Wall Street estimates in the last quarter, though it turned red and revenue fell with Disneyland closed and theaters in major dark markets. It is the latest showbiz giant to report financial data in the latest and most anticipated earnings cycle, as its sprawling business touches most media and entertainment for better or worse.

Disney suffered a loss of $ 710 million on a profit of $ 771 million the previous year. Diluted and adjusted losses per share for the three months ended September were lower than expected, standing at 20 cents per share versus earnings of $ 1.07 the previous year.

Revenue of $ 14.7 billion was down 23% from $ 19 billion the year before. Wall Street had anticipated a diluted loss of 70 cents per share on sales of about $ 14.2 billion.

Disney stock hit after-hours trading, up 6%. It had dipped at the close, ending the session 1.7% at $ 135 in a bear market.

The most significant negative impact of the current quarter and year of COVID-19 has been
approximately $ 2.4 billion and $ 6.9 billion, respectively, on operating income of Parks, Experiences and Products due to lost revenue due to closures or reduced operating capacities, the company said.

“Even with the disruption caused by COVID-19, we were able to effectively manage our
companies while taking bold and deliberate steps to position our company for greater long-term growth, ”said CEO Bob Chapek. “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. “

The company’s rapidly growing streaming hub of Disney + has actually kept the buzz and the stock afloat, supported recently by reports that a highly effective Pfizer vaccine could be approved before the end of the year. . This encouraging news for travel, parks, cruise lines, cinemas and advertising, combined with the company’s broadcast power, pushed Disney stock to one of the best trading days of the week. The question is whether and to what extent skyrocketing infection rates in the United States will impact business. Executives will likely answer this and other questions on a 4:30 p.m. ET call.

“The move to streaming was essential, but the prospect of successful streaming execution and healthy activity in parks and theaters is a powerful combination,” Loop Capital’s Alan Gould said in a recent memo, reiterating a “buy” rating on the action. “We believe that a high number of Disney + subscribers will outweigh what will undoubtedly be a dismal quarter from an operational and depreciation standpoint.”

At Parks, Experiences and Products, revenue for the quarter fell 61% to $ 2.6 billion, and segment operating results fell $ 2.5 billion for a loss of $ 1. $ 1 billion. s

Cable Networks revenue for the quarter increased 11% to $ 4.7 billion and operating profit
fell 7% to $ 1.2 billion. The decrease in operating income is explained by the decline in ESPN’s results,
partially offset by increases at FX Networks and National Disney Channels.

Broadcasting revenues for the quarter increased 10% to $ 2.5 billion and operating income increased 47% to $ 553 million. The increase in operating profit is attributable to growth in affiliate revenues and lower network programming and production costs and lower marketing expenses, partially offset by a timing impact of new accounting guidelines . Advertising revenue remained stable compared to the previous year quarter as the decline in average network audience was offset by the benefit of an additional week in the current quarter of higher network rates and an increase in political advertising on detained television stations.

The final quarter is Disney’s final fiscal year, marked by huge changes including a new CEO – Bob Chapek announced just before COVID flattens the global and US economy in March. Disney has joined with other entertainment giants in radically revamping and streamlining its entire media and entertainment footprint. Distribution and marketing were centralized in a single global unit called Media and Entertainment Distribution headed by Kareem Daniel. Content creation has been split into three groups, Studios, General Entertainment, and Sports, overseen by Alan Horn and Alan Bergman, Peter Rice and Jimmy Pitaro respectively. The latest details were announced earlier this week.

Holidays and layoffs have hampered park activity, with Disneyland still closed despite the relatively successful opening of Walt Disney World in July as well as international parks. Disneyland in Hong Kong and Paris had to close again as COVID increased. Hong Kong has reopened, but Paris has not, with lockdowns in Western Europe continuing. Disney earlier this month announced 28,000 layoffs in its US parks division.

On the positive side, advertising has intensified and the decline in traditional video subscribers appears to have moderated.

Disney took nearly $ 5 billion in depreciation on its international channels in the June quarter.