Family entertainment giant Walt Disney has seen its business massively reshaped as the coronavirus pandemic saw the gates slam shut at its global themes parks, cruises cancelled, cinemas closed and movie filming put on ice.

This saw the Dow Jones Industrial Average and S&P 500 member plunge to its first annual loss in 40 years.

Disney recorded a net loss of $2.83 billion under generally accepted accounting principles (GAAP), on a $4 billion revenue fall to $65.4 billion. Disney estimates the impact of Covid-19 on its operating profit for fiscal 2020 at $7.4 billion, with the Parks, Experiences and Products segment alone taking a $6.9 billion hit.

The entertainment giant was forced to shut its global theme parks early in 2020, with Disney World in Florida closing on 12 March. Disney World is the most popular tourist attraction on earth, with nearly 21 million visitors in 2019.

Investors rallied behind the stock despite this news, sending the share price jumping 13.5% to $144.67, partly because losses were not as bad as feared and thanks to theme park re-openings. Only Disneyland in California and Disneyland Paris remain closed.

TV ON-DEMAND BOOST

But it was the incredibly popular streaming TV services, Disney+, ESPN+ and Hulu that have fuelled optimism among investors. Disney+, which includes the Disney animation films and the Marvel and Star Wars universes, saw paid subscribers surge to more than 73 million in its first year. That places its growth rate well ahead of Disney’s goal of 60 million to 90 million customers by the end of fiscal 2024, which management set when the service launched in 2019.

‘The real bright spot has been our direct-to-consumer business, which is key to the future of our company’, said chief executive Bob Chapek.

This saw streaming TV overtake its enormous theme parks operation in terms of revenue (see chart).

‘Covid-19 and measures to prevent its spread impacted our segments in a number of ways, most significantly at Parks, Experiences and Products’, the company wrote in its latest earnings report for the quarter and fiscal year ended 3 October 2020.

‘Our theme parks were closed or operating at significantly reduced capacity for a significant portion of the year, 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. We also had an adverse impact on our merchandise licensing business,’ the report said.

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