Walt Disney Co announced fiscal fourth-quarter loss on Thursday attributed largely to changes resulting from the COVID-19 pandemic. Its earnings were pulled down by costs from restructuring related to its streaming services and huge losses incurred in revenue from its California theme parks, which remain closed amid surging coronavirus cases in the US.
In October, Disney announced remodelling of the business, with its streaming services such as Disney Plus occupying the centre. It created three content arms, one each for sports, general entertainment and studios, which have famous brands including Star Wars and Marvel. Their primary focus is on making shows and movies for streaming services.
Meanwhile, a new distribution group will centralize how the content is sold and oversee streaming operations. Prior to the pandemic, the development of streaming services like Disney Plus, which now has progressed to over 73.7 million subscribers, was a central motto to the company, whose success exceeded the analysts’ and company’s own expectation. The rise of OTT platforms, as people started searching for recreational methods while staying within the confines of their home, further boosted their earnings. Subscribers to Disney’s mainstreaming bundle “Disney Plus, ESPN Plus and Hulu” top 120 million, it still plans to launch another international streaming service called Star.
Disney has been able to reopen its theme parks in Florida, Shanghai, Japan and Hong Kong with limited capacity. However, Paris Disneyland was forced to close in late October and will not reopen until 2021. Disney estimated that the net adverse impact of COVID-19 on the parks division operating income was about $2.4 billion in the fourth quarter. The company said it has received a blow due to “significant disruption” in the production and availability of programming material including the shift of live sports from the third into the fourth quarter and beyond. The suspension of TV and movie production also led to significant losses, though some have resumed in the current quarter. This caused a 7% fall in cable network operating income year over year to $1.2 billion.