Disney shares initially fell on the report but rose about 5% after hours during the company’s earnings call as CEO Bob Chapek announced a new streaming service and that Disney+ subscribers would get exclusive access to the release of “Mulan” after being repeatedly delayed by theater closures.
Here are the key numbers:
- Earnings per share, adjusted: 8 cents vs. loss of 64 cents expected, according to Refinitiv
- Revenue: $11.78 billion, vs $12.37 billion expected, according to Refinitiv
However, Disney reported a net GAAP loss for the quarter of $4.72 billion. Though Disney reported a adjusted earnings per share of 8 cents, the net loss was due in large part to charges related to its earlier acquisition of Twenty-First Century Fox, including severance and contract termination costs and integration costs.
Disney’s direct-to-consumer and international segment was the only one that reported an increase in year-over-year revenue. Disney said it now has 100 million paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+. More than half of those subscriptions are for Disney+, which boasted 57.5 million subscribers as of the end of the quarter in less than a year of service.
As of Monday, Disney+ reached 60.5 million paid subscribers, Chapek said on the company’s earnings call, hitting its goal of 60 million to 90 million subscriptions by 2024 four years early.
Chapek also announced Disney+ subscribers would be able to watch it’s much-anticipated live action film “Mulan” on the platform for $29.99 in the U.S. beginning September 4. Subscribers in Canada, Australia, New Zealand and parts of Western Europe will also be able to stream the movie at slightly varied prices, Chapek said. The movie’s original release had been pushed back as theaters were forced to close during the pandemic. It will be Disney’s first effort to sell content on Disney+, on top of the monthly $6.99 subscription.
Chapek also announced that Disney would launch a new general entertainment streaming service in calendar year 2021 under the Star brand it acquired from Fox. The service will feature content Disney already owns from ABC Studios, Fox Television, FX, Freeform, 20th Century Studios and Searchlight, Chapek said. The service will be fully integrated into Disney+ in many markets, Chapek said, and distributed under the Star brand.
Here’s how Disney’s segments did in the third quarter in terms of revenue compared to the same quarter last year:
- Media Networks: $6.56 billion, down 2%
- Parks, Experiences and Products: $983 million, down 85%
- Studio Entertainment: $1.74 billion, down 55%
- Direct-to-Consumer and International: $3.97 billion, up 2%
Disney’s parks and studio entertainment segments suffered the most during the quarter as pandemic lockdowns restricted travel and production.
Disney had been able to reopen some of its parks with limited capacity and new restrictions to keep visitors safe, but its Disneyland theme park and resort in California was forced to delay its expected July reopening as the state pushed back its guidelines amid rising case numbers.
The company took a $3.5 billion hit to its operating income from parks being closed during the quarter. CFO Christine McCarthy said on Disney’s earnings call that it did not see as much upside as originally anticipated from its reopening of Walt Disney World in Orlando, Florida due to the surge of cases in the region.
Revenue for the Parks, Experiences and Products segment, which includes cruises, resorts and merchandise, fell 85% to below $1 billion during the quarter.
Disney has been unable to release a new film in theaters since mid-March, which has taken a toll on its studio business. During the quarter, studio entertainment revenues slumped 55% to $1.7 billion.
The lack of theatrical releases was partially offset by video on-demand, lower marketing costs and lower film costs.
Disney faced particularly tough comparisons this quarter, as the company released box office blockbusters “Avengers: Endgame” and “Aladdin” during the same period last year. “Avengers: Endgame” was the highest grossing film of all time, earning $2.79 billion at the global box office.
Disney announced last quarter it was suspending its dividend payout for the first half of the year. McCarthy told analysts on the call a decision on whether to pay out a dividend for the last half of the year would come around late November or early December. She added that the dividend suspension gave Disney more flexibility to deal with changes required by the pandemic.
This story is developing. Check back for updates.
Correction: This story has been updated to reflect Disney’s net loss after income taxes.