finance news

Disney profit take a US$1.4Bn hit following the coronavirus outbreak

Disney profit take a US$1.4Bn hit following the coronavirus outbreak
Disney profit take a US$1.4Bn hit following the coronavirus outbreak

The coronavirus outbreak has taken a toll on numerous businesses worldwide. Recently, Walt Disney Co. felt the heat as it revealed that the pandemic had caused its profits to slump US$1.4 billion, with major blow coming from its closed theme parks. However, the company is planning to get back on track by reopening its Shanghai Disneyland for limited visitors starting May 11.

According to Disney CEO, Bob Chapek, the Chinese government has directed Disney to limit attendance at 30% of capacity, or roughly 24,000 people. Disney will restart operations with very few number for some weeks as it adjusts to safety standards like masks and temperature screenings, and social distancing.

A couple of months ago, Disney was showcasing a record year for its movie studio and promising entry into the streaming media business. However, in late January, the coronavirus started taking a hit on its businesses on a global scale.

According to Disney, the Covid-19 impact on its current quarter profits before income taxes across all of its businesses was estimated around US$1.4 billion, with US$1 billion coming from its theme parks. The company anticipates a larger hit in this current quarter, which ends in June.

In a bid to reduce costs, Disney has put 120,000 employees on furlough, while executives whose salaries have reduced, claim that they were positive that Disney would get back on track once the pandemic subsides.

Disney+, the streaming service launched in November, though seems to be gaining traction. The service recorded 54.5 million paying subscribers recently, up from 50 million last month. Disney’s D2C and international unit, which comprises Disney+, is still spending large sums to build the service.

Meanwhile, media networks which include broadcaster ABC and ESPN, posted profit of US$2.4 billion, a 7% increase from the previous year.

Source Credit: https://www.straitstimes.com/business/companies-markets/disney-takes-198b-hit-from-coronavirus-to-reopen-shanghai-disneyland-next