By Jon Swartz
MarketWatch photo illustration/iStockphoto, Getty Images
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 faces a greater existential financial crisis in the age of COVID-19 than Walt Disney Co., a legendary company built on social interaction that may find its newest business offers the most immediate relief.
Disney /zigman2/quotes/203410047/composite DIS +0.16% faces adversity in its three core business units. The theme-park business faces the most negative impact: The signature Disneyland amusement park in California, opened in July 1955, is shut down for only for the fourth time. Disney World in Florida and its parks in Paris, Shanghai and Hong Kong are also shuttered. Disney Cruises is docked. Parks, experiences and products is Disney’s largest business segment, ringing up $26.2 billion in sales last year.
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All live-action film production stopped in the company’s movie division, and the March 27 premiere of the big-budget remake of “Mulan” has been postponed to July 24 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, there are no major sports scheduled for weeks, leaving Disney-owned ESPN with hours of airtime to fill. To partially fill the sports-less void, ESPN moved up the premiere for its docu-series on Michael Jordan’s 1998 Chicago Bulls “The Last Dance,” to April 19. It was originally to debut in June.
If that isn’t enough to unnerve jittery investors, there is the matter of Bob Iger. Last month, Iger announced he was immediately stepping down as CEO after 15 years and sliding over to head creative development. Bob Chapek, who headed 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 Bob Iger steps down; company veteran Bob Chapek takes reins
While the entertainment empire teeters, Disney’s newest business and underlying diverse businesses offer short- and long-term hope.
Streaming service Disney+ could prosper with an infusion of fresh content, and more people forced to stay at home. On Wednesday, the company said paid subscriptions had soared past 50 million. (Previously, the figure was over 28 million.) 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 -1.08% offer limited seating or shutter altogether. “Mulan,” for example, was expected to bring in between $80 million and $100 million during its opening weekend in theaters.
See also: Disney’s stock leaps as Disney+ subscriber data ‘impressed’ JPMorgan analyst
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. “Frozen II,” which racked up $1.45 billion at the box office, was made available on Disney+ three months earlier than planned. “Onward,” the latest Pixar animated movie that debuted in theaters on March 6, arrived on Disney+ on April 3, after going on digital sale March 20. One of Disney’s planned theatrical releases, the sci-fi fantasy “Artemis Fowl,” will skip cinemas and go straight to Disney+ at a date to be determined. It was scheduled to be released in theaters May 29.
See also: Disney+ subscriptions have topped 28 million, earnings beat expectations
The availability of “Frozen II” on Disney+ is “less about per unit revenues, and more about driving subscriptions and satisfaction,” Wells Fargo analyst Steven Cahall wrote.
Disney rivals Netflix Inc. /zigman2/quotes/202353025/composite NFLX -1.59% , Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -0.40% and Comcast Corp. /zigman2/quotes/209472081/composite CMCSA -0.54% have also ratcheted up content in recent days to sate the appetites of members and draw new customers.
How the numbers are changing
Revenue: Average analyst expectations were $19.56 billion at the end of 2019, but have declined to $18.4 billion as of April 3. Estimates for each of the business segments — media networks ($6.69 billion to $6.62 billion); parks, experiences and consumer products ($6.58 billion to $5.97 billion); and studio entertainment ($2.97 billion to $2.73 billion) — declined, according to analysts polled by FactSet.
Earnings: Average analyst expectations were $1.20 per share at the end of 2019, but have declined to $1.02 a share as of April 3. Disney is scheduled to report its fiscal second-quarter results on May 12.