As Walt Disney Co.’s cable channels lost subscribers in recent years and the company pumped billions of dollars into new streaming services, theme parks were a steady source of profit
Last year, operating income at Disney’s largest division rose 11 per cent to $6.76 billion, making it the company’s fastest-growing profit driver. The results were so strong that Disney promoted parks head Bob Chapek in February to succeed long-time CEO, Bob Iger. It’s an entirely different story today.
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With the company’s theme parks shuttered all over the world due to the coronavirus, Disney is expected to report a steep drop in profit when it announces financial results on May 5. Earnings from resorts and consumer products may slump by $500 million or more in the period.
The world’s largest entertainment company has many COVID-19-related headaches, including no live sports for ESPN and no theaters to show its movies. Film and TV production has shut down, and its cruise ships are docked. But the parks face a big hit going forward.
With fewer people willing to travel by airplane or take their families to crowded places, Disney’s domestic park attendance – an estimated 83 million visitors last year – could fall by half in 2020, according to John Hodulik, a UBS analyst who previously recommended the stock. Profit at the division may tumble to just $500 million this year and $200 million the next.
“The lingering effects of the COVID-19 outbreak will be felt for a number of years, and the parks segment is unlikely to regain previous thresholds for profitability until after a vaccine is widely available,” Hodulik said in an April 20 report.
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