Has Disney put the worst of the pandemic behind it?
By Lisa Richwine and Akanksha Rana (Reuters) - Walt Disney Co's rapidly growing streaming video business and a partial recovery at its theme parks gave investors fresh hope on Thursday that the entertainment company had put the worst of the coronavirus pandemic behind it. After Disney reported quarterly earnings, its shares jumped 5.6% to $143.12 in after-hours trading. Overall revenue fell 23% to $14.71 billion (£11.22 billion) in the quarter, above analysts' average estimate of about $14.2 billion
By Lisa Richwine and Akanksha Rana
(Reuters) - Walt Disney Co's
After Disney reported quarterly earnings, its shares jumped 5.6% to $143.12 in after-hours trading.
Overall revenue fell 23% to $14.71 billion (£11.22 billion) in the quarter, above analysts' average estimate of about $14.2 billion.
Disney's adjusted loss per share, excluding one-time items of 20 cents, also beat Wall Street expectations of a more drastic 70 cents per share loss.
While the coronavirus pandemic clobbered the company's theme park and movie studio businesses, its focus on streaming was well timed to consumers being stuck at home, and Disney showed it was able to manage its sparsely attended theme parks with smaller losses than analysts expected.
"Disney will emerge stronger from this crisis," said Haris Anwar, senior analyst at Investing.com.
One year after it launched the Disney+ online streaming subscription to compete with Netflix Inc
"We are going to continue to ramp up our investment" in streaming, Chief Executive Bob Chapek said on a conference call. Disney, which owns ESPN, the Disney Channels and the ABC broadcast network, will favor streaming over traditional TV, he said.
For the quarter that ended in September, the streaming division lost $580 million, less than the $1.0 billion that analysts expected. Anwar predicted it would turn a profit ahead of 2024, when the company forecast.
Disney+ faces a test, however, as a one-year free trial offer for millions of Verizon Communications Inc
VIRUS HURTS MOVIE AND CRUISE BUSINESSES
Disney's businesses outside of streaming have been hammered by the global COVID-19 pandemic. The outbreak forced the company to close theme parks, suspend cruises and delay movie releases, and it left ESPN without major sports broadcasts. Disney said the pandemic reduced profit at its parks units by $2.4 billion.
"Even with the disruption caused by COVID-19 , we’ve been able to effectively manage our businesses while also taking bold, deliberate steps t position our company for greater long-term growth," Chapek said in a statement.
The parks have started to welcome back visitors and sports leagues have resumed play, though a rise in cases in Europe and the United States threatens that progress.
During the quarter that ended in September, most of Disney's theme parks, including its flagship resort in Florida, had reopened but with limited attendance, mask requirements and other safeguards. The parks and consumer products business lost $1.1 billion in operating income, less than analysts expected.
Disneyland in California has been shut since March, and Disneyland Paris was forced to close for a second time in October as virus cases spiked in France. The prospect of a coronavirus vaccine in 2021 could be crucial to the future of the Disney parks.
At the media networks segment, the return of major sports helped boost ESPN. The unit reported $1.9 billion in operating income, up 5% from a year earlier.
Profit at the movie studio slumped 61% to $419 million, as the company delayed major movie releases until 2021 and many theaters remained closed.
The company said it will forgo its semi-annual dividend for the second half of fiscal 2020 to finance its streaming business.
(Reporting by Akanksha Rana in Bengaluru and Lisa Richwine in Los Angeles; Editing by Arun Koyyur and Cynthia Osterman)
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