Exactly one year to the date after launching streaming service Disney+ to great fanfare, Disney on Thursday reported a $710 million quarterly operating loss.
Amid a coronavirus pandemic that continues to hammer its legacy businesses — forcing the shuttering of its parks, the delay of its theatrical releases and ongoing layoffs — Disney+ remains a bright spot for the company. In just 11 months, it has attracted 73.7 million subscribers, easily surpassing a goal that didn’t need to be met until 2024.
Around the rest of the company, the picture is still bleak. Disney took a $6.9 billion hit to its Parks, Experiences and Products business in fiscal year 2020 as many of theme parks sat empty. The impact on its Media Networks, Studio Entertainment and Direct-to-Consumer businesses was not as great. Still, all told, the company said COVID-19 had a $7.4 billion impact on its full-year segment operating income across all its businesses.
Still, Disney managed to pull off a fiscal fourth quarter that was better than expected. Its adjusted loss came in at 20 cents-per-share, smaller than the 71 cents-per-share that Wall Street had forecast, per FactSet. And its quarterly revenue hit $14.7 billion, up from Wall Street’s $14.1 billion consensus.
The stronger-than-expected quarter coupled with Disney+ growth was enough to impress investors, who sent Disney’s stock up 5 percent in after-hours trading.
“Even with the disruption caused by COVID-19, we’ve been able to effectively manage our businesses while also taking bold, deliberate steps to position our company for greater long-term growth,” CEO Bob Chapek said in a statement.
Disney’s earnings come amid a companywide reorganization meant to more effectively align each content around around streaming as the No. 1 priority. Though each of the studio arms is getting greater creative control over the programming they make, all P&L and business decisions have been moved under a new Media and Entertainment Distribution group headed by Chapek acolyte Kareem Daniel. The subsequent restructuring of Peter Rice’s General Entertainment Division is likely to mean layoffs in the near future. Meanwhile, ESPN has already let go of some 300 employees as it prioritizes streaming amid “tremendous disruption” to the consumption of sports amid the shutdown.
Disney is planning a Dec. 10 investor day where it plans to share more details about how the reorganization will boost Disney+ and its other streaming businesses. The company is also expected to use that event to unveil new details of a Star-branded international streaming service. On a conference call with investors on Thursday, Chapek said that the company will be “heavily tilting the scales” to its direct-to-consumer businesses going forward.
But despite the subscriber gains, streaming is still a money loser for Disney, which has said it expects Disney+ to become profitable in 2024. The segment lost $580 million in operating income during the quarter.
Disney said Thursday that it would forego its next divided, previously scheduled for January, and invest the money into growing its streaming business instead.
Disney is hopeful that the rest of its businesses will bounce back over time. The company has resumed or completed production on all film and TV projects that were previously impacted by COVID-19, Chapek said Thursday, and it’s currently in production on 100 projects. Meanwhile, Disney shares jumped earlier in the week on positive news about a virus vaccine. Still, Chapek chastised California officials on Thursday, saying he was “extremely disappointed” that Disney had not been allowed to reopen Disneyland in Anaheim. “We’re very pleased of our track record,” he said of other reopenings, including Walt Disney World Resorts in Florida.