Disney ‘clobbered’ by pandemic hit

Walt Disney Co. shares fell on Wednesday, after the company’s second- quarter results underlined the broad- based hit the media company is taking from the pandemic.

Adjusted earnings were more than 30 per cent below expectations, the biggest miss in more than a decade, according to data compiled by Bloomberg. “COVID-19 has clobbered Disney’s core businesses, and things will get uglier,” Bloomberg Intelligence wrote. The pandemic has closed theme parks, docked cruise ships, and prevented Disney from releasing new films into theatres.

However, on Wednesday Walt Disney Co. Chief Executive Officer Bob Chapek said Shanghai Disneyland will reopen on May 11, with social- distancing measures, limits on crowds, temperature checks and masks.

The US$ 5.5 billion park, Disney’s largest single international investment, will limit attendance to less than 30 per cent of the 88,000 guests per day it can normally accommodate, Chapek said Tuesday on a call with investors. Entry will require reservations.

Guests and employees will have to wear face coverings, although cast members dressed as famous Disney characters like Snow White and Cinderella will be exempt from that requirement and will just keep their distance from customers instead.

The Shanghai reopening — the first since the COVID-19 outbreak — will be a huge test of whether theme parks can successfully operate amid the pandemic — and whether people will want to show up. The rest of Disney’s theme parks around the world remain closed.

In a separate blog post, Disney’s chief medical officer, Pamela Hymel, said the company was considering opening its other properties, which stretch from Tokyo to Paris, in a similar fashion. Restaurants and stores outside the parks could open first. Guests would be able to use an app to reserve a spot in line for rides, reducing their exposure to others.

“These are just a few examples of the many areas we are developing plans for,” Hymel said.

Among Disney’s four divisions, theme parks took the biggest hit last quarter, with profit plunging to US$ 639 million from US$1.51 billion in the same period last year.

Despite that weakness, analysts are positive on the company’s Disney+ streaming- video service, which is “the reason to own shares,” says Rosenblatt Securities.