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Disney’s theme park coronavirus closures result in third-quarter hit of $3.5 billion

  • August 04, 2020

The Walt Disney Company’s theme park closures due to the coronavirus pandemic took their toll on the company’s balance sheet to the tune of $3.5 billion in April, May and June, according to a presentation Disney executives made Tuesday. That’s more than three times the $1 billion it lost during the first three months of the year.

Disney’s domestic parks – Disney World and Disneyland, as well as Disneyland Paris,  resorts and cruise operations were closed for the entirety of the third quarter.

The company’s parks, experiences and products segment revenue declined 85% to $1 billion compared with the same period last year. Operating income fell $3.7 billion to a loss of $2 billion.

Disney’s media networks segment helped offset the losses from parks, experiences and products. Across all segments, the coronavirus pandemic’s cumulative impact to the company’s income totaled $2.9 billion.

“This is obviously a very uncertain time,” CEO Bob Chapek said during an earnings webcast Tuesday. “We should be in good shape once consumer confidence returns.”

Disney has felt the full impact of the coronavirus pandemic, from its theme parks, resort hotels and retail stores, to its cruise lines and TV and film production.

Disney World in Florida and Disneyland Paris both opened in July; Disneyland backed off its plan to reopen July 17 amid the COVID-19 surge in California and has not announced a new reopening date.

Shanghai Disneyland reopened in May. While Hong Kong Disneyland reopened in June, it closed again in July because of a new coronavirus outbreak.

Both California and Florida have the highest numbers of coronavirus cases in the country.

As of Tuesday, the Florida Department of Health counted more than 497,000 total cases, making the state second only to California, with more than 519,000 cases.

Guests wear masks as required to attend the official reopening day of the Magic Kingdom at Walt Disney World in Lake Buena Vista, Fla., Saturday, July 11, 2020. Disney reopened two Florida parks, the Magic Kingdom and Animal Kingdom, Saturday, with limited capacity and safety protocols in place in response to the coronavirus pandemic.

Disney executives said the coronavirus surge in Florida has resulted in more cancellations and lower attendance than the company was expecting. The park is currently operating at approximately 50% capacity.

But the impact of the park’s reopening on the company won’t be known until it releases fourth-quarter results.

“We expect demand will grow when the COVID situation in Florida improves,” chief financial officer Christine McCarthy said.

Chapek said Disney World had experienced a higher-than-expected number of cancellations, and a falloff in visitors coming to the park from out-of-state. Long-distance travel remains well below last year’s volume, and airlines have cut flights from their schedules.

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