Coronavirus hits Walt Disney with $1.4 billion profit cuts, Shanghai amusement park to reopen on May 11

New York [USA]: Walt Disney estimated on Tuesday that global measures to contain the coronavirus pandemic has cut down the company’s profits by USD 1.4 billion, mostly from its shuttered theme parks, with more to come as executives detailed how the economic fallout would affect every part of its business for the foreseeable future.

The total operating income for the first quarter that ended on March 28 fell by 37 per cent from a year earlier to USD 2.4 billion, the world’s largest entertainment company told The Wall Street Journal on Tuesday, while revenue rose by 21 per cent to USD 18 billion.

The business impact of the pandemic will likely be even more pronounced in the current quarter. Shutdowns that first began in Asia became more widespread globally only in the final few weeks of Disney’s fiscal second quarter.

Analysts have further downgraded Disney’s stock even as stay-at-home orders are lifted later and businesses reopened.

Robert Iger, Disney’s executive chairman, sounded an upbeat note for investors, saying the company’s movies and parks will be sought out once again when lockdowns end. “People find comfort in our messages of hope and optimism,” he said.

Bob Chapek, who became the company’s chief executive in February just as the novel coronavirus was spreading around the globe, said that Disney would reopen the Shanghai park on May 11, but in a phased manner that would include limits on capacity, and mandatory masks for guests as well as temperature screenings before entry. Performers who portray characters like Snow White won’t wear masks but will keep a distance from guests, he was quoted as saying by the Journal.

The Chinese government, meanwhile, is also limiting the capacity at the park to 30 per cent, or about 24,000 guests, Chapek said. The park will operate at capacities far below that in its first days of reopening, he added.

Disney is now spending heavily on the production and consolidation of its Hulu holding. Disney has been controlling Hulu since its USD 71.3 billion acquisition of the entertainment assets of 21st Century Fox.

Disney+ has also been a bright spot for the company since the pandemic led to stay-at-home orders around the world. The streaming service had 54.5 million subscribers as of Monday, up from 33.5 million on March 28.

Like its parks division, Disney’s media networks segment, which includes ESPN, will likely take a big hit in the fiscal third quarter as major sports leagues stay on the sidelines, according to an analysis cited by the newspaper. Some ESPN efforts to engage sports fans in alternative ways have been appearing to be paying off.

Movie theatres have opened in only a handful of communities, but no major Disney title is scheduled for release until a live-action update of ‘Mulan’ hits theatres in late July, after being postponed from late March. Disneyland and Walt Disney World remain closed while workers opined they expect the company will limit capacity further upon reopening.

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