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Disney continues to prioritize streaming subscriber growth as it ended an unexpectedly turbulent 2020 with a 67 percent decline in quarterly operating income.
The company’s streaming business has reached 146 million total paid subscribers, driven by Disney+ and its nearly 95 million subs. Meanwhile, the pandemic continues to ravage Disney’s parks business, leading to an estimated $2.6 billion in lost revenue during the period, the company’s fiscal first quarter.
“We believe the strategic actions we’re taking to transform our Company will fuel our growth and enhance shareholder value, as demonstrated by the incredible strides we’ve made in our DTC business, reaching more than 146 million total paid subscriptions across our streaming services at the end of the quarter,” CEO Bob Chapek said in a statement. “We’re confident that, with our robust pipeline of exceptional, high-quality content and the upcoming launch of our new Star-branded international general entertainment offering, we are well-positioned to achieve even greater success going forward.”
COVID-19 has created unprecedented challenges for Disney, which in March of last year was forced to close its theme parks, stop production on its upcoming projects and pull movies from the theatrical calendar. Disney expects the pandemic will continue to impact its business through fiscal 2021, leading to estimated costs of around $1 billion.
Even so, the company remains hopeful that it will be able to reopen its parks, albeit with increased precautions, as more people get vaccinated. And Chapek maintained on a call with investors that Marvel film Black Widow is intended for a theatrical debut this spring — though he acknowledged that the company will be watching theater reopenings closely before making a final call.
During the fiscal first quarter, Disney reported net income of continuing operations of $29 million on revenue of $16.2 billion, a 22 percent decline. Losses at at its Parks and Experiences division narrowed to $119 million. The better-than-expected performance, coupled with continued streaming growth, led investors to send the stock, which had closed the day up less than 1 percent to $190.91, up during after-hours trading.
This was the first quarter that Disney reported earnings under a new organizational structure that resulted from its October reorganization, which put content decision-making in the hands of creative leaders Alan Bergman, Peter Rice and Jimmy Pitaro and moved distribution decision-making under newly promoted chairman Kareem Daniel.
Daniel’s new Disney Media and Entertainment Division reported revenue of nearly $12.7 billion during the quarter, driven by linear-networks revenue of $7.7 billion and direct-to-consumer revenue of $3.5 billion. But whereas linear networks had operating income of $1.7 billion, direct-to-consumer had a $466 million operating loss.
Though streaming is not yet a profitable business, Disney has sold investors on its plan to reinvent itself as a direct-to-consumer business. In December, the company held a dazzling virtual presentation where it unleashed an onslaught of streaming programming announcements, including plans for 10 Star Wars series and 15 live-action and animated films — all with a goal of releasing 100-plus originals each year.
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