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Disney reports a 98% decline in quarterly income

But the fledgling Disney+ streaming service is now closing in on 100m subscribers globally

Mickey and Minnie Mouse are seen walking through Sleeping Beauty Castle at the Disneyland Park in Hong Kong.

Fri Feb 12 2021 - 08:18

Disney on Thursday reported a 98 per cent decline in quarterly income, the result of steep losses at its coronavirus-devastated theme park division.

But the company’s fledgling Disney+ streaming service is now closing in on 100 million subscribers worldwide, enough to easily convince investors that Mickey Mouse is well-positioned for the future, despite the continuing pandemic.

Overall, Disney pulled off a slim $29 million in profit, or 2 cents a share, down from $2.13 billion in the same period a year ago.

The company’s vast theme park business was the most troubled, with more than $2 billion in operating losses in the company’s first fiscal quarter, which ended January 2nd.

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That was the result of major properties that remain closed, like Disneyland in California, and a dramatic decline in attendance at the flagship Walt Disney World in Florida, which is capping daily attendance at 35 per cent of capacity as a coronavirus safety measure.

Other Disney divisions mostly had results in which the negatives (the cancellation of movies) were offset by positives (sharply reduced film marketing costs).

Revenue totalled $16.2 billion, a 22 per cent decline. Wall Street had expected per-share losses of 41 cents and revenue of $15.93 billion. From a stock market standpoint, Disney has had a year of extremes.

In March, when the company first closed theme parks, postponed movies and, for a time, operated its sports cable network without any major live sports to broadcast, shares declined 38 per cent.

But investors have been remarkably forgiving since then, even as Disney reported quarter after quarter of doomsday financial results. Disney shares closed at $190.91 on Thursday on the New York Stock Exchange, by far an all-time nominal high.

Analysts say investors are overlooking near-term losses and focusing on the potential of Disney+, which now has 95 million subscribers worldwide, the company said. It had only about 30 million subscribers a year ago (and did not exist a year and three months ago).

Increasingly, streaming is looking like a two-company game, at least at the top, between Disney and Netflix, which had a long head start. Disney+ has benefited from the pandemic, stepping in to sell a monthly subscription to homebound families.

But the upstart service also found a megawatt hit, “The Mandalorian,” straight out of the gate. A plethora of original television series and movies are headed to Disney+ this year.

Even so, there is one not-so-minor asterisk on the heady subscriber numbers: Average monthly revenue per paid Disney+ subscriber declined 28 per cent, to $4.03. That is because Disney+ has signed up millions of subscribers in India by offering them an almost-giveaway price. – New York Times

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