By Jon Swartz
This article is part of a series tracking the effects of the COVID-19 pandemic on major businesses, and will be updated. It was originally published on April 7.
Perhaps no company has endured a greater existential financial crisis in the age of COVID-19 than Walt Disney Co., a legendary company built on social interaction that has leaned heavily on its newest business for relief.
This was brutally clear in May, when Disney /zigman2/quotes/203410047/composite DIS +1.23% said earnings plummeted more than 90% in its fiscal second quarter. “While the COVID-19 pandemic has had an appreciable financial impact on a number of our businesses, we are confident in our ability to withstand this disruption and emerge from it in a strong position,” said Bob Chapek, who took over as chief executive of Disney from Robert Iger during the quarter.
Read more: Disney earnings plummet more than 90% as coronavirus wipes out more than $1 billion
The Mouse House faces adversity in its three core business units. The theme-park business faces the most negative impact as the signature Disneyland amusement park in California, which first opened in July 1955, is shut down for only for the fourth time in its history. Disney World in Florida reopened under strict rules on July 11 after it was shuttered nearly four months. Disney Cruises is docked. Parks, experiences and products is Disney’s largest business segment, ringing up $26.2 billion in sales last year.
Business in the age of COVID-19: Read how other large companies will be affected by the coronavirus
All live-action film production stopped in the company’s movie division, and the Aug. 21 premiere of the big-budget remake of “Mulan” has been delayed indefinitely as most theaters remain dark across the country. Disney-produced movies, not including Searchlight Pictures or 20th Century, hauled in $1.54 billion in North American sales last year.
The TV side, where Disney’s media networks generated $24.8 billion in revenue last year, is equally vexing. While the company’s TV properties continue to air, major sports like baseball (July 23) and the NBA (July 30) have returned to Disney-owned ESPN. The status of Major League Baseball’s truncated 60-game season teeters on collapse with the outbreak of COVID-19 among players and staff of the Miami Marlins.
If that isn’t enough to unnerve jittery investors, there is the matter of Robert Iger. In February, Iger announced he was immediately stepping down as CEO after 15 years and sliding over to head creative development. Bob Chapek, who steered parks, experiences and products, was anointed Iger’s successor. That division, the company’s biggest, brought in $26.2 billion last year.
See also: Disney CEO Robert Iger steps down; company veteran Bob Chapek takes reins
While the entertainment empire wobbles, Disney’s newest business and underlying diverse businesses offer short- and long-term hope. Streaming service Disney+ has flourished with an infusion of fresh content, led by the megahit “Hamilton,” and more people forced to stay at home.
The movie version of Lin-Manuel Miranda’s Pulitzer Prize- and Tony Award-winning musical of the founding father’s life premiered over the July 4 weekend, and was downloaded 752,451 times globally on the Disney+ app, including 458,796 times in the U.S., according to analytics firm Apptopia. As of early May, the service had 54.5 million subscribers world-wide just six months after its launch. It costs $6.99 a month or $69.99 a year in the U.S.
Disney+ takes on greater significance because the company has stopped production on live-action movies or postponed their release at the same time major theater chains like AMC Entertainment Holding Inc. /zigman2/quotes/200235402/composite AMC +5.86% offer limited seating or nothing at all. “Mulan,” for example, was expected to bring in between $80 million and $100 million during its original opening weekend in theaters back in late March.
Disney is pushing movies that were already released to theaters to the streaming service faster than it normally would have, as it seeks to drive Disney+ subscriptions. In addition to “Hamilton,” “Frozen II,” which racked up $1.45 billion at the box office, was made available on Disney+ three months earlier than planned. Disney also is adding a new Muppets series, “Muppets Now” (July 31), and premiered movies like “The Mighty Ducks” (July 3).
Disney+ premieres in Europe on Sept. 15 and in Latin America in the second half of 2020.
Disney rivals Netflix Inc. /zigman2/quotes/202353025/composite NFLX +2.07% , Apple Inc. /zigman2/quotes/202934861/composite AAPL +3.75% , and Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +2.49% have ratcheted up content the past few months to draw new customers. Meanwhile, Comcast Corp.’s /zigman2/quotes/209472081/composite CMCSA +0.98% Peacock (July 15) and AT&T Inc.’s /zigman2/quotes/203165245/composite T 0.00% HBO Max (May 27) debuted.