Disney Takes a Pandemic Hit, and There’s Worse to Come

LOS ANGELES — Last year at this time, Disney was celebrating the record-breaking arrival of “Avengers: Endgame” in theaters. On Tuesday, with movie theaters closed worldwide, along with theme parks, Disney said that its quarterly profit fell more than 90 percent.

Disney said its board had voted to forgo payment of its summer dividend, preserving about $1.6 billion in cash.

Mr. Chapek declined to say when Walt Disney World in Florida or Disneyland in California might reopen. (They closed in mid-March.) What about production on large-scale movies? When might shooting resume? “No projections,” he said.

“We’re actually going to open far below that,” Mr. Chapek said, “to get our training wheels on.”

Disney’s theme parks have long been watched as a bellwether for the broader economy. It is unclear whether the masses — now reeling from widespread pay cuts and job losses — will be able to afford Disney vacations when the gates do reopen. It took two years for Disney’s parks and cruise ship division to fully recover from the last recession.

The company must also navigate other troubling media trends. TV advertising (Disney owns ESPN, ABC, FX and other channels) is plummeting. Newly cost-conscious consumers are also canceling their cable service in larger numbers. At least 1.6 million people cut the cord between January and April, about 20 percent more than analysts had expected.

Profit in the most recent quarter, the second in Disney’s fiscal year, totaled $475 million, down 91 percent from $5.43 billion in the same period a year earlier. Excluding one-time items, per-share profit fell 63 percent, to 60 cents from $1.61.

Analysts had been expecting per-share earnings of 88 cents and revenue of $17.8 billion. Since late January, when Shanghai Disneyland closed because of the coronavirus in China, Disney shares have fallen almost 30 percent. Its stock fell about 2 percent in after-hours trading on Tuesday.

Operating income for the last quarter at Disney Parks, Experiences and Products, a division that includes theme parks, cruise vacations and retail stores, totaled about $639 million, a decline of roughly 58 percent. Disney said the pandemic took a $1 billion bite out of the unit’s operating profit.

Losses at Disney’s streaming business, anchored by Disney Plus and Hulu, widened to $812 million from $385 million, largely because of costs associated with rolling out Disney Plus in Europe. Analysts had expected $886 million in losses. Disney said that streaming losses would total roughly $1.1 billion in the current quarter, which will include the introduction of Disney Plus in Japan. Disney Plus now has 55 million subscribers.

The only Disney division to improve its position in the quarter was television, where total income rose 7 percent, to $2.38 billion. Cable profit increased 1 percent and broadcasting profit soared 53 percent, largely because of Fox assets. ESPN, which now has virtually no live events to show, declined, although ratings for a 10-part documentary series on Michael Jordan have been strong.

In recent days, prominent analysts downgraded Disney. Citing “significant and unrivaled earnings risk for the foreseeable future,” Michael Nathanson of MoffettNathanson moved the company to neutral from buy. Richard Greenfield, a founder of LightShed Partners, lowered Disney to sell from neutral, writing in a note to clients that there “is no clarity on when vacation travel normalizes, nor when movie theater attendance normalizes.”

“A challenge of this magnitude,” Mr. Iger said, requires “all hands on deck.”

Mr. Iger and Mr. Chapek both emphasized their expectations for a full recovery over the long term. “What we create has never been more necessary or more important,” Mr. Iger said. “People find comfort and inspiration in our messages of hope and optimism.”

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