Disney Q1: d2c offsets adverse impact of park biz

It reported $16.25 billion revenue for the quarter

KOLKATA: The Covid2019 pandemic has upended many of The Walt Disney Co (Disney)’s key business verticals like theme parks, theatrical film business, and Broadway productions. But still the mouse house has been able to sail through the crisis on the back of its booming direct-to-consumer business that has reported a 73 per cent surge in revenue.

Direct-to-consumer (d2c) revenues for the quarter reached $3.5 billion and operating loss narrowed from $1.1 billion to $466 million. The decrease in operating loss was due to improved results at Hulu, and to a lesser extent, at Disney+ and ESPN+, the company said in its earnings report.

The increase at Hulu was due to subscriber growth and advertising revenue gains driven by higher impressions, partially offset by an increase in programming and production costs due to higher subscriber-based fees for programming the live television service.

The improvement at Disney+ was driven by an upswing in subscribers, which soared to 94.9 million overall, though partially offset by higher programming and production cost amortisation and increased marketing and technology costs. The rise in subscribers and costs reflected the ongoing expansion of Disney+ including launching in additional markets. The current quarter included three months of Disney+ operations whereas the prior year quarter included two months.

Domestic channels revenues for the quarter increased one per cent to $6.1 billion and operating income decreased seven per cent to $1.1 billion. The decrease in operating income was due to lower results at cable business, partially offset by an increase at broadcasting business.

International channels revenues for the quarter rose five per cent to $1.6 billion and operating income declined three per cent to $375 million. The decrease in operating income was due to higher programming and production costs and lower affiliate revenue, partially offset by advertising revenue growth and a reduction in non-programming costs. The Indian Premier League (IPL) impacted the growth in advertising revenue as well as programming and production costs.

A huge blow to Disney’s overall performance was the 53 per cent dip in parks, experiences and products revenues to $3.6 billion. Segment operating results decreased $2.6 billion to a loss of $119 million. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses. The media giant estimates the total net adverse impact of pandemic on segment operating income in the quarter was approximately $2.6 billion.

Content sales and licensing revenues fell by 56 per cent to $1.7 billion during the quarter, as Disney had no new theatrical releases during October, November and December and limited home entertainment releases.

Overall, the company topped analysts’ expectation reporting $16.25 billion revenue for the quarter compared to $15.92 billion expectation. However, it dropped 22 per cent from $20.9 billion compared to the same quarter last year. It reported adjusted earnings per share of 32 cents for the period, down from $1.53 from the year-ago period. The conglomerate netted $17 million in profits.

Disney has pegged capital expenditures for fiscal year 2021 to be along the lines of 2020, with the business investing more in the media and entertainment segment and less in the parks segment.

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