The Walt Disney Company released its earnings for the fourth fiscal quarter of 2020 on Thursday (Nov. 12), reporting a major dip in revenues as the novel coronavirus pandemic continues to wreak havoc on its bottom line.
Disney’s financial results continued to reflect significant impacts from COVID-19, which it estimates adversely impacted segment operating income in the quarter by US$3.1 billion. The company, in a statement, said that its most severely impacted divisions were parks, experiences and products with an estimated adverse impact of $2.4 billion in the fourth quarter.
As a result, the family entertainment conglomerate saw its revenues plummet 23% to $14.7 billion and reported net income losses of $710 million from continuing operations compared to the $777 million in earnings Disney logged this time last year. Wall Street estimates had tagged revenues at $14.2 billion.
The company recorded a loss of 20 cents per share compared to income of $1.07 per share in the prior-year quarter, while its full-year fiscal 2020 diluted earnings per share came in at $2.02.
However, subscription streaming service Disney+, which launched one year ago on Nov. 12, is a bright spot for the entertainment conglomerate.
Despite the enduring pandemic, Disney reported that paid subscriptions to the streaming service had topped 73 million buoyed by the live taping of Lin Manuel Miranda’s Hamilton and by such popular unscripted fare as anthology docuseries Marvel’s 616, celebrity-focused docuseries Becoming, feature documentary Howard and competition series in The Maze and The Quest.
In a call with investors and analysts on Thursday, Disney CEO Bob Chapek (pictured) said: “The growth of Disney+ speaks volumes about the strength of our IP, our unparalleled brands and franchises and our amazing content creators, all part of the Disney difference that sets us apart from everyone else.”
Across the full suite of Disney-backed streaming services, the business has exceeded 120 million paid subscriptions worldwide, with notable subscriber gains for ESPN+ and Hulu, including the rapidly growing Hulu + Live TV.
Despite reporting increased revenues of 41% in its direct-to-consumer (DTC) business to $4.9 billion, Disney recorded operating losses of $580 million, a figure that was down from losses of $751 million year-over-year. In a statement, Disney said 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 our international channels.”
“Given that our DTC business is key to the future growth of our company, we’ve restructured our media and entertainment businesses,” added Chapek. “By separating content creation from distribution, we’ve been able to streamline our processes and better align the organization toward these important strategic objectives as we accelerate our pivot to a DTC-first business model.”
The company also experienced growth within its media networks division. Revenues within the unit surged 11% for the quarter to $7.2 billion, and segment operating income rose 5% to $1.9 billion.
Disney attributed increases in its media networks department to lower programming costs at its linear channels and increased sales of Disney content to Hulu and Disney+.
“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,” summed up Chapek. “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.”