Disney’s stock was down 36.5% for the year when the company shut its theme parks. The reason was plain enough: a coronavirus pandemic, now officially declared by the World Health Organization (WHO), and a business that earns much of its money from crowds.
The closures cover all eleven parks in North America, Asia and Europe. Three of the Asian gates, Shanghai, Hong Kong and Tokyo, were already dark. Walt Disney World in Florida and the California resort were next, followed by Disneyland Paris. Reuters also reported that Disney Cruise Line would stop all new departures from Mar 15 through the end of the month.
The parks matter more than any other piece of the company. In fiscal 2019, the Parks, Experiences and Products division brought in more than $26 billion in sales, or 37% of Disney’s total revenues.
The damage was already showing
Disney had warned that its second-quarter fiscal 2020 operating income would suffer from the Asian closures. The Shanghai shutdown was expected to cut operating income by $135 million. Hong Kong would take a hit of roughly $145 million.
Film is a problem too. Cinemas have shut in key European and Asian markets, which interrupts Disney’s movie business.
Streaming as a cushion
Analysts at Zacks pointed to one possible offset. With more of the world stuck at home, viewing online should rise, and Disney+ has just arrived to catch it. The direct-to-consumer lineup now spans Hulu, ESPN+ and Disney+.
Launch dates are lined up. Western Europe gets Disney+ on Mar 24, the same day as the UK, where Disney signed a deal with Comcast-owned Sky to carry the service on Sky Q and Now TV in the UK and Ireland. India follows on Mar 29 through the Hotstar service.
The content slate is full as well. Season 2 of The Mandalorian arrives in October 2020, The Falcon and the Winter Soldier begins in August, and a 10-episode series based on The Mighty Ducks, with Emilio Estevez and Lauren Graham, premieres later this year.
Zacks rates Disney a #3 (Hold).
