Disney Takes $6.9 Billion Hit Amid Park Closures In 2020

Disneyland California
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The company disclosed the amount in its fourth quarter and full-year earnings report.

The Walt Disney Co. on Thursday reported that the company took a hit of $6.9 billion in 2020 due to parks around the globe either being shuttered or operating at a greatly reduced capacity due to the pandemic.

Disney disclosed the amount in its fourth quarter and full-year earnings report. Discussing the high impact on the company due to the novel coronavirus pandemic, the company noted: "The most significant impact was at the Parks, Experiences and Products segment where since the second quarter of the fiscal year, our parks and resorts have been closed or operating at significantly reduced capacity and our cruise ship sailings have been suspended."

Domestically, Disney reopened its Florida destination back in July. However, in California, the company has been in a bitter stalemate with Gov. Gavin Newsom. Disneyland, along with other major Southern California theme parks, has pushed to reopen and want an easier path than the one currently in place in order to do so. Still, Downtown Disney is currently open and a portion of California Adventure will reopen later this month for shopping and outdoor dining.

Disney CEO Bob Chapek noted Thursday on the earnings call the company has proven it can responsibly operate its parks with strict health and safety measures in place. He then took a shot at Newsom, saying he was "extremely disappointed" with Newsom's "arbitrary standard," for Disneyland to reopen rather than looking at the "science" of their operation. "We're very pleased of our track record," Chapek said of other parks' successes.

Disney in September demanded Newsom and state officials issue guidelines. When Newsom did not budge at that time, Disney announced 28,000 park employees would be laid off. Chairman Bob Iger also resigned from the state's coronavirus economic task force. Last month, a group of eight SoCal mayors sent a joint letter to Newsom urging him to offer a less stringent path for the theme parks to reopen. Earlier this week, it was revealed that more furloughs, which would also impact executives, would be occurring due to Disneyland still be shuttered.

The Parks department saw revenue for the quarter decrease by 61 percent to $2.6 billion, and segment operating results decrease by $2.5 billion to a loss of $1.1 billion according to the earnings report. The company estimates the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $2.4 billion.

Christine McCarthy, senior executive vice president and chief financial officer, said the company does not have "visibility on how long these impacts will last" concerning the theme parts being shuttered or operating at reduced capacity. McCarthy noted that the company did not expect the theme park portion of Disneyland to reopen until next year.