Disney posts better-than-expected results in Q4
File photo/Zhang Xiaoqing (NBD)
The Walt Disney Company announced Thursday better-than-expected fourth quarter earnings results for fiscal year 2020 amid worries about the impact of the COVID-19 pandemic on the business of the U.S. entertainment giant.
Disney's revenue fell around 23 percent to 14.71 billion U.S. dollars in the quarter ended Oct. 3, surpassing the average 14.2 billion dollars in revenue that some analysts had expected. The company earned 19.11 billion dollars in the same period last year.
Diluted earnings per share (EPS) from continuing operations for the fourth quarter was a loss of 39 cents compared to income of 43 cents in the prior-year quarter. Excluding certain items affecting comparability, diluted EPS for the quarter was a loss of 20 cents compared to income of 1.07 dollars in the prior-year quarter, according to the company.
"Even with the disruption caused by COVID-19, we've been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth," said Chief Executive Officer Bob Chapek in a release.
"The real bright spot has been our direct-to-consumer business, which is key to the future of our company, and on this anniversary of the launch of Disney+ we're pleased to report that, as of the end of the fourth quarter, the service had more than 73 million paid subscribers -- far surpassing our expectations in just its first year," he added.
Shares of Disney rose as much as 6 percent in after-hours trading following the better-than-expected fourth quarter earnings results.
Disney noted that COVID-19 and measures to prevent its spread impacted the company in a number of ways, most significantly at Parks, Experiences and Products. Disney theme parks were closed or operating at significantly reduced capacity for a significant portion of the year. The company's cruise ship sailings and guided tours were suspended since late in the second quarter and retail stores were closed for a significant portion of the year. The company's merchandise licensing business has also been badly affected by the pandemic.
Disney said its Parks, Experiences and Products revenues for the quarter decreased 61 percent to 2.6 billion dollars, and segment operating results decreased 2.5 billion dollars to a loss of 1.1 billion dollars. Lower operating results for the quarter were due to decreases at both the U.S. and international parks and experiences businesses.
"As a result of COVID-19, Disneyland Resort and our cruise line business were closed for all of the current quarter. Shanghai Disney Resort re-opened in May, while Walt Disney World Resort and Disneyland Paris re-opened in mid-July and Hong Kong Disneyland Resort was open for about two weeks at the beginning of the quarter and about one week at the end of the quarter. All of our re-opened parks and resorts operated at significantly reduced capacities during the current quarter," the company stated.
Disney's Studio Entertainment revenues for the quarter decreased 52 percent to 1.6 billion dollars and segment operating income decreased 61 percent to 419 million dollars. The decrease in operating income was due to lower theatrical and home entertainment results.
Disney noted that theatrical distribution was lower as there were generally no significant worldwide theatrical releases in the quarter compared to "The Lion King" and "Toy Story 4," which were in release in the prior-year quarter, adding that the current quarter was negatively impacted by COVID-19 as many theaters throughout the world were either closed or operating at reduced capacity.
The company's home entertainment sales also suffered during the fourth quarter due to no comparable titles as last year's "Avengers: Endgame," "Aladdin" and "Captain Marvel."
Disney's Direct-to-Consumer and International revenues for the quarter increased 41 percent to 4.9 billion dollars and segment operating loss decreased from 751 million dollars to 580 million dollars. The decrease in operating loss was primarily due to improved results at Hulu and ESPN+, partially offset by higher costs at Disney+, driven by the ongoing rollout and a decrease at the company's international channels.