Disney Took $3 Billion Hit From COVID-19

All in all, the Walt Disney Co. says COVID-19 cost it $3 billion in its fiscal third quarter ended July 27. Broadcasting was actually one of the up sectors, because lower production costs and increased retrans revenues more than offset a big drop in advertising sales. But improved operating income results for broadcasting and cable couldn’t offset the pandemic’s impact on theme parks, resorts and cruise ships.

“Total broadcasting ad revenue was down 17%, driven by decreases at our owned television stations and the ABC Network. Higher results at cable networks are primarily due to increases at ESPN and FX Networks,” Senior EVP-CFO Christine McCarthy told Wall Street analysts on the company’s quarterly conference call Tuesday.

Broadcasting revenues were up 12% for the quarter to $2.53 billion, while operating income grew 55% to $477 million. Cable revenues fell 10% to $4.03 billion, but operating income increased 50% to $2.50 billion.

Disney CEO Bob Chapek painted a brighter picture for the current quarter, noting the resumption of live sports on ESPN. And he said some production has resumed for the movie and TV studios.

Chapek is also upbeat on the Disney+ streaming service. Subscriptions globally have exceeded expectations and have now topped 65 million. Add in Hulu and ESPN+ and the tally around the world is over 100 million subs.

But that’s not all — the CEO announced that yet another streaming service, Star, will be launched next year, using content Disney already owns from ABC and its various cable networks. Star will be integrated into Disney+ in the U.S., but be marketed as a separate brand in many countries. Some analysts questioned why the company didn’t expand Hulu globally, but Chapek noted that the company doesn’t have rights to use third-party content elsewhere.

Along with the COVID-19 pandemic, Disney is also responding to public outcry over racism and social injustice. Chapek noted that the company has announced a number of new initiatives to strive toward inclusion.