Disney's Free Pass Extended -- Heard on the Street
05 August 2020 - 01:12AM
Dow Jones News
By Dan Gallagher
As a family-friendly entertainment giant, Walt Disney Co. knows
how to emphasize the positive.
The company's quarterly results Tuesday afternoon were certainly
an exercise in that. The quarter ended June 27 was the first to
reflect the full effects of the coronavirus pandemic and its
related shutdowns. Predictably, theme-park revenue plunged 85%
year-over-year to just $983 million. Studio entertainment revenue
slid 55% to $1.7 billion, as movie theaters remain shut down. The
company noted that the last segment got some help by selling
content such as the latest "Star Wars" movie to its Disney+
streaming service.
That service is one of the few good things Disney has going for
it right now. So naturally, it got a lot of attention from the new
chief executive, Bob Chapek, during the company's call. The company
said Disney+ had 57.5 million paid subscribers by the end of the
quarter, and Mr. Chapek noted that about 3 million have been added
since.
That means it took Disney+ about nine months to reach a level
that took Netflix about eight years to achieve. It also means
Disney now has a viable direct distribution channel for its movies,
which the company seems eager to test. Mr. Chapek announced plans
to shift the live-action version of "Mulan" from a theatrical
release to a "premiere access" offering on Disney+. The movie will
cost $30 to stream -- a premium to other recent films pushed into
streaming by theater shutdowns. But with Mulan's reported
production budget in the $200 million range, Disney has some costs
to recoup.
The positive streaming news was enough to send Disney's share
price up 5% in after-hours trading. Streaming has provided an
important backstop to the company at a time when nearly everything
else is going wrong. Disney's share price may be down 19% this
year, but it has still outperformed most of its media, theme park
and movie peers.
Even so, other key parts of the business still have a big hole
from which to climb out. Chief Financial Officer Christine McCarthy
noted Tuesday that revenue from the limited reopening of some of
its theme parks has been less than expected, due primarily to the
recent surge of Covid-19 cases in Florida. Disney may be riding out
this storm, but it isn't abating just yet.
(END) Dow Jones Newswires
August 04, 2020 18:57 ET (22:57 GMT)
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