The Walt Disney Co. reported sharply lower profits in its fiscal second quarter as the COVID-19 pandemic wiped out many of its most lucrative businesses.
On the company’s conference call executive chairman Bob Iger said he was confident the company would bounce back.
Disney’s theme parks, cruise lines and theatrical films were shut down and its advertising business was impacted by the virus. Disney estimates COVID-19’s cost at about $1.4 billion in operating income.
“While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said Disney CEO Bob Chapek. “Disney has repeatedly shown that it is exceptionally resilient, bolstered by the quality of our storytelling and the strong affinity consumers have for our brands, which is evident in the extraordinary response to Disney+ since its launch last November.”
Net income was $460 million, or 25 cents a share, in the quarter compared to $5.5 billion a year ago, or $3.53 a share.
Revenues were up 21% to $18 billion. Revenue gains reflect the addition of businesses in the acquisition of 21st Century Fox last year.
Disney said in its quarterly report that its Disney+ streaming service had 33.5 million subscribers as of March 28. In April, the company said Disney+ had topped 50 million subs, including 8 million on Star in India. During Disney's earnings call, the number was updated to 54.5 million as of Monday.
ESPN+ had 7.9 million subscribers, up from 2.2 million a year ago and Hulu had 32.1 million subscribers, up 27%. Of Hulu’s subs, 28.8 million were SVOD only and 3.3 million were the vMVPD with live TV channels.
The company said Disney+ was generating $5.63 per subscriber per month, ESPN+ was generating $4.24, Hulu’s SVOD-only subscribers paid $12.06 and its Live TV plus SVOD subs paid $67.75.
The international rollout of Disney+ will continue this year, starting with Japan in June, Chapek said.
Disney’s Direct-to-Consumer and International unit posted a loss of $821 million, compared to a $385 million loss a year ago.
Media networks' operating income rose by 7% to $2.4 billion as revenues rose 28% to $7.3 billion.
Cable network operating income was up 1% to $1.8 billion, with revenues rising 17% to $4.4 billion. ESPN’s operating income was lower due to higher programming and production costs and lower advertising revenue, partially offset by higher affiliate revenue.
ESPN ad revenue was down 8% in the quarter. So far in the current quarter, ESPN ad revenues are "significantly below" where they were this time last year, CFO Christine McCarthy said.
After airing a virtual NFL draft last month, ESPN is planning a virtual version of its ESPY awards on June 21.
Broadcasting operating income rose 53% to $397 million as revenue rose 49% to $2.8 billion.
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