Disney’s Progress Report Shows Pandemic Recovery Remains Slow

Walt Disney Co. is recovering from the Covid-19 crisis, but business won’t return to normal anytime soon.

That was the gist of the progress report that the company delivered to Wall Street this week. In two talks with investors, Chief Financial Officer Christine McCarthy covered a wide range of topics, including the success of the company’s Disney+ streaming service and the unusual online launch of “Mulan.”

But with so many of Disney’s businesses rocked by the pandemic -- from theme parks to blockbuster movies -- the company is still plotting its comeback.

Theme Parks

June theme-park attendance in Florida turned out lower than the company expected, after a spike in virus cases there cut into travel. Disney shifted to marketing its attractions to local residents. A little more than half of the company’s hotels in Florida will be open by the end of this month, McCarthy said.

McCarthy: “To be nimble and flexible, we adjusted our offerings where we opened it up more to local visitation, particularly the annual pass holders.”

Media Networks

The traditional TV business is shrinking, with more customers canceling their cable subscriptions and abandoning networks like the Disney Channel. The return of production, meanwhile, has been a mixed blessing: Shows are shooting again, but that has brought higher expenses.

“We saw and have seen -- as we all know in the media business -- a decline in the subscriber base of our traditional multichannel ecosystem,” McCarthy said. “What we saw post-Covid was an acceleration of the decline, and we don’t know if that decline was due to Covid or that it will basically revert to the way it was prior to Covid.”

TV Advertising

Ad spending plummeted after live sports were put on hold in March. The commercials are now coming back, but the volume and pricing are not where they once were. Overall expectations were that ad volume would be down 20% in the fall “upfront” market, she said, and that Disney would do better than that.

McCarthy: “Both scatter demand and pricing this quarter are better than the third quarter, even though it’s not as good as last year. The trends are improving, at least for us, quarter to quarter.”

Streaming Service

Disney+, which debuted in November, signed up a remarkable 60.5 million subscribers in its first 10 months. The $7-a-month service was priced to make it very attractive, McCarthy said, and the rate could climb in the near future.

McCarthy: “It’s clear that we priced Disney+ at a very accessible price point initially. There is pricing power we believe, but that will come as we put more original content into the services.”

©2020 Bloomberg L.P.

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