Disney takes Us$1.4bil coronavirus hit

BURBANK: Walt Disney Co investors got a taste of just how bad the coronavirus pandemic will be for the world’s largest entertainment company.

The crisis cost Disney as much as Us$1.4bil in lost profit last quarter, the company said, with Us$1bil coming from shuttered theme parks alone, and nearly every part of its business taking a hit.

Earnings plunged by more than half to 60 US cents a share in Disney’s second quarter, excluding some items. That trailed the 86-cent average of analysts’ estimates.

Revenue rose 21% to Us$18bil, but that was driven by the acquisition of 21st Century Fox’s entertainment assets last year.

It’s only going to get worse. Disney has already lost more than a full month of parks business and cruises in the current quarter, along with the shutdown of movie theaters and the loss of live sports on its flagship ESPN cable networks. Analysts predict the company will lose hundreds of millions of dollars this period, with revenue in free fall.

“This quarter is kind of a black hole,” said Dave Heger, an analyst with Edward Jones in St Louis who expects the parks to remain shut for “most if not all” of the quarter.

“They’re just in the mode of getting through the quarter, and by September, they can ramp back up. It’s anybody’s guess right now how quickly that can occur.”

Disney has taken a variety of steps to cut costs, including reductions in executive pay and furloughs for workers. The company on Tuesday also said it would forgo its July dividend payment, saving about Us$1.6bil, and cut capital spending by Us$900mil.

Losses in the quarter were mitigated somewhat by a Us$150mil employee tax credit that was part of the federal coronavirus relief legislation. —

“They’re just in the mode of getting through the quarter, and by September, they can ramp back up. It’s anybody’s guess right now how quickly that can occur.” Dave Heger