Disney profits drop 90pc as parks are shut down
Disney’s profits have fallen by more than 90pc as the coronavirus pandemic shuts down its network of theme parks.
The company took a $1bn (£800m) hit from its giant tourism division, which includes its theme parks, cruises and retail stores, as part of a $1.4bn it said it had lost due to the pandemic.
Disney is also struggling from the closure of cinemas, forcing it to delay film releases, and a live sports blackout, which has hit its ESPN division.
It saw a sales boost from its recently launched streaming service Disney Plus, whose subscriber numbers have soared to 50m as viewers are stuck at home, but the service is not yet profitable on its own, contributing to Disney’s downturn.
The company said it made $475m in profit in the first quarter of the year, down 91pc, despite revenues climbing 21pc to $18bn.
Disney closed its parks in China and Hong Kong in January, and in the US in the first half of March, and has cancelled cruises as tourism shuts down. It said it planned to re-open its park in Shanghai next week but had “limited visibility” as to when it could open other parks.
Despite the company’s media empire, its travel division has historically been its biggest money maker, but its operating profits fell 58pc and revenues fell 10pc at the start of the year. The direct to consumer division, which includes Disney Plus, lost $812m. It also blamed lower advertising revenues and higher debt costs.
The profit drop comes as Disney attempts to navigate the departure of Bob Iger, the long-time boss who has overseen a string of acquisitions including Pixar, Marvel, Star Wars maker LucasFilm, and 21st Century Fox.
Mr Iger stepped down as chief executive in late February after 15 years, two weeks before the World Health Organisation declared coronavirus to be a pandemic, making way for parks chief Bob Chapek and becoming chairman before leaving next year.
He is believed to have taken a more hands-on role during the outbreak, potentially complicating the handover to Mr Chapek.
Disney, whose shares dropped slightly after the announcement, said it would not pay its half-year dividend.
Mr Iger said he was confident that people would want to return to parks when the pandemic eases, saying: “They miss doing the things they enjoy, the things that make them happy.”